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CFTC slaps a broker because of Dodd-Frank Act - The USA Nanny State Rolls On

Discussion in 'Forex Basics Boot Camp - Fx Articles by Pharaoh' started by Pharaoh, Jan 10, 2012.

  1. Pharaoh

    Pharaoh Colonel

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    CFTC slaps a broker because of Dodd-Frank Act
    The USA Nanny State Rolls On

    by Pharaoh

    (I almost had that writing addiction cured, but it came back.)

    I'm never sure if I love to hate the CFTC or hate to love the CFTC. On the one hand, they've been really ramping up enforcement actions against scammers that steal money from traders and investors. On the other, they are more than happy to run around wasting time and taxpayer money to restrict the rights of US citizens and residents to deal with brokers from other countries.

    It's bad enough that there are so many pointless government restrictions, such as no hedging, FIFO, and leverage restrictions that make US traders want to get their accounts to offshore brokers. Sadly, our government in the land of the (formerly) free keeps chasing any broker that dares to accept US clients without subjecting itself to US restrictions.

    FxOpen has been ordered to pay $140,000 and to stop dealing with US clients. The "crime" was not registering as a Retail Foreign Exchange Dealer (RFED) with with the CFTC. At least the penalty was minimal. I'll wager this was done to convince other offshore brokers to quietly give up and accept a slap on the wrist instead of putting up a proper legal fight against these unjust rules.

    HELLO GOVERNMENT AND REGULATORS! I'm thrilled that you kicked FXCM in the teeth for differential slippage being used to snatch money from traders. I'm ecstatic that you've caught and heavily fined other US brokers for using malicious plugins for MT4. I'm grateful that you've taken actions against scam brokers who try to rip off US clients. I applaud you for all the onshore Ponzi Schemes you've hunted down and closed.

    I'm less than happy that those same regulators and regulations that are being used to protect investors and traders from obviously undesirable actions also contain provisions that limit the rights of traders to make trading decisions in their US brokerage accounts and also are designed to keep all that investment money inside the USA.

    Government regulations should be designed to protect people in the least restrictive way possible. Traders need to be aware of risks, not be prevented from taking risks. Sure, dealing with a broker in another country is, on average, more risky than dealing with one in the USA. Then again, trading forex is more risky, on average, than trading stocks or buying bonds. I am happy to have the government warn me of danger. I am thrilled when the government goes after financial criminals, at home and abroad. What I don't need the government doing is tying my hands and telling me which brokers I can and can't trade with and what trading style I have to use. It's my money and I should be free to place it with the broker of my own choice and to trade in a style I prefer.

    Imagine for a moment if all governments worldwide started making rules like this. Imagine not being able to conduct financial investments outside your own country unless the brokerage or other investment company was registered with and subject to the regulations (possibly contradictory regulations) of all the countries where it did business. Imagine of this extending into other areas of international commerce. We are supposed to be living in an age of globalization, yet the US government is desperately trying to throw the wheels of progress into reverse while using "protecting people" as an excuse.

    So much for freedom being a core value in the United States.

    I have a suggestion for the US Congress and the CFTC. Freedom and safety don't have to be in conflict if rules are written competently. Americans need justice, not tight control. Dump these silly restrictions on forex trading and focus on penalizing brokers that rip off clients. If an offshore brokerage is caught stealing from US traders, them ban that brokerage from having US clients and work with other countries to fine the company and/or top shut it down instead of blocking all offshore brokerages. If you really want to keep investor money inside the USA, lighten up on the trading restrictions for US brokerage to make those brokers more competitive and maybe fewer US traders will be feeling the need to move their money offshore. Maybe offshore traders will open their accounts inside the USA instead.

    Of course, it's so much easier for the American government to keep careful track of money belonging to US citizens if it's all safely kept inside of US banks and brokers. One might almost think that these offshore account restrictions were part of a larger plan to keep people from moving money overseas.

    CFTC Press Release about fine against FxOpen
     
    Iceman543 likes this.
  2. Denny W

    Denny W Private, 1st Class

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    Can the CFTC do that to FxOpen? Because Fxopen it's not under their jurisdiction.
     
  3. Laurie Gold

    Laurie Gold Corporal

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    Hey Pharaoh; I am aware the CFTC brought actions against quite a few brokerages a several months back. Any idea of what happened with those cases? Moreover, I agree with you, the primary reason US trade4rs go off-shore is because of the trading conditions. Certainly Congress and the CFTC can allow US brokerages to compete with those conditions.
     
  4. Denson

    Denson Recruit

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    CTFC Regulations

    When I had an American Broker back aways before (and VERY shortly after) CTFC passed these ridiculous laws to 'protect' me I lost $714 (never forget that amount) because of that stupid FIFO ruling. That day I had seven or 8 trades open and then on one pair it started going quickly against me (and it was my largest lot trade). I had to close out about 6 very small winners BEFORE I could close the rapidly losing trade due to FIFO.

    Thanx US Govt. I've been trading since 92 - and you think you know more about trading than I do? Still have my open account with FinFX (Thank God!) I pray they tell these stupid politicians here to go to hell if they pressure Finland to abide by the U.S. Trade Regulations!
     
  5. marjiemiller

    marjiemiller Private, 1st Class

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    The question is: Will FXOpen pay it?

    Good Point. And then question is: Will FXOpen pay it? Anyone can win a lawsuit or even a criminal conviction, and never get the money. Collecting is the hard part.

    I think it's telling that no "victims" ever receive any money. It seems to be a government "shakedown" for fines, which is just another name for taxes.

    On another point, I've heard some bad "rumors" about FXOpen, which stopped me from opening an account with them...So, did they bring the heat upon themselves with complaints, or did the CFTC just go after them for the cash?
     
  6. PistolDave

    PistolDave Corporal

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    I agree with Pharaoh. The government is doing it's duty properly when it regulates the industry; not when it restricts the freedom of the people to choose and thereby restricts their chances of increasing their prosperity.

    I have always been opposed to government regulation and authority in general, but without it there would be a free-for-all in the markets that would allow any scam artist, bogus brokerage service, pyramid scheme, etc. free reign to prey upon the many gullible and naive traders who discover this new way of "get rich quick" business. I've been trading for a long time, but I can still remember when I "discovered" the futures market for myself. I saw all that easy money and how I could get rich so quickly. I had stars in my eyes. And, I am embarrassed to admit, I did fall for some of the hyip programs and other bull---t that scammers were promoting. Yes, I was a newbie and I had to learn the hard way, but even now I still don't want the government restricting the way I place my trades in a legitimate trading market, or what country I can do business in. I don't want a socialist state; I want freedom to choose and the freedom to have the chance to achieve prosperity by my own efforts.

    So, we have gone through a period of time where forex dealers have had little or no restrictions on how they do business. I assume that most of them have been mostly honest in their dealings with their customers, but some have not. And there has been a nonstop howl of complaints by traders who have lost money because of the actions of unscrupulous dealers they have chosen to place money with. Alright, the government is coming to the "rescue" of all of us now. Again, there is no free ride here. If you want don't want to use your own good judgement, and you don't want to take responsibility for your own choice of how you risk your own money, the authorities will do that for you. And they only expect a small fee for their generous service; namely taxes and some restriction of your freedom. Still not enough to satisfy you? Well they can still tax more and regulate more... and more... and more. It is possible to regulate an industry completely out of business, therefore I suggest we all start using our own good common sense and that we take responsibility for our own actions so we don't have to rely on big brother to do it all for us. Yep. That's what I think. Well, I'm off my soapbox for now. :)
     
  7. Pharaoh

    Pharaoh Colonel

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    The Dodd-Frank Act makes any broker that accepts US clients (citizens or residents) subject to the CFTC. Personally, I'd love to see this jurisdiction question brought before the US Supreme Court.

    FxOpen is one of 25 brokerages sued by the CFTC (so far) for committing the "crime" of not registering with the CFTC while accepting US clients. To the best of my knowledge, this is all the CFTC has against FxOpen and most of the other brokerages named. For a company of their size, $140,000 is a slap on the wrist. That much money probably barely covers the CFTC's legal costs, so my personal theory is that this is just to set an example to bring the other offshore brokers into line.

    I'd have to dig through the CFTC press releases to see if any others have been fined yet. I selected FxOpen for this article since the ruling against them was last week and since the fine seemed more along the lines of a warning shot to get the attention of other offshore brokers.

    There are a few scam brokers on the list of sued companies and I hope that those are getting some special attention.
     
  8. fxfrench

    fxfrench FXOpen AU Representative

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    Of course FXOpen will pay it. With a new office in Sydney Australia and under the strict regulation of the Australia Securities and Investments Commission, FXOpen's past, present and future conduct is under the microscope. I am quite sure that the rumours you heard were without merit. :)
     
  9. ANGE JUKIC

    ANGE JUKIC Private

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    GUYS OPEN AN ACCOUNT IN OZ.

    Many great brokers and none of this Dodd Frank Crap.

    Happy trading
     
  10. Scoony

    Scoony Private, 1st Class

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    It is all about taxes and control

    Hey guys !

    I am not sure if you have noticed because it gradually grows onto you...The US Government is trying to control everything and everybody - like robots.
    If you have funds outside the country they cannot control your actions, they dont get reports and they cant collect TAXES...

    It scares the hell out of them that Trilliions of USD could be elsewhere and they cant get it from you.

    So they make up these stupid rules like the Frank-Dodd Act to use it as justification to get that control back over you.
    They even go to foreign countries (I still wonder what the legal ground is) and sue brokers for doing their normal and legal activity!

    Normally the foreign Government and courts should defend and protect their "brokers" but they dont - it is obvious that this is a worldwide plan
    with "higher" interests.

    Sooner or later it will come to Europe and the rest of the world, too...

    Americans...get your freedom back! Dont let corrupt politicians take it away from you.

    Scoony
     

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