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CFTC Sues 14 Forex Companies

Discussion in 'Forex Articles' started by AsstModerator, Jan 26, 2011.

  1. AsstModerator

    AsstModerator FPA Forums and Reviews Admin

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    One good part of the new CFTC regulations from last year is that the CFTC has some amazing new enforcement powers. I just got a note from a good friend of the FPA about the CFTC suing 14 forex brokers.

    Many of these brokers are very well known to the FPA. Some are on good terms with the FPA. Some aren't. All are invited to post public responses here about their point of view.

    Here's the press release....

    RELEASE: PR5974-11

    January 26, 2011

    CFTC SUES 14 FOREIGN CURRENCY FIRMS IN NATIONWIDE SWEEP

    Action represents first use of new authority under the 2008 Farm Bill and Dodd-Frank Act to regulate foreign exchange dealers.

    Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced that it simultaneously filed 13 enforcement actions in Federal District Courts in Chicago, the District of Columbia, Kansas City and New York, alleging that 14 entities are illegally soliciting members of the public to engage in foreign currency (forex) transactions and that they are operating without being registered with the CFTC.

    Today’s actions are the first taken by the CFTC to enforce new forex regulations that became effective in October 2010. These new regulations require entities that wish to participate in the forex market to register with the CFTC and abide by regulations intended to protect the public. These regulations require that forex dealers take steps to protect investors, including maintaining capital and records, which will reduce risk and increase transparency.

    The following companies were sued by the CFTC as part of this sweep:

    EuroForex Development LLC, a Delaware LLC;

    FIG Solutions Limited, Inc., a Delaware corporation;

    ForInvest, a Delaware corporation;

    FXOpen Investments Inc., a Delaware LLC;

    FXPRICE, a Delaware LLC;

    GIGFX, L.L.C., a Delaware company;

    InovaTrade, Inc., a company with purported offices in Florida;

    InstaTrade Corporation d/b/a InstaForex, a British Virgin Islands company;

    InvesttechFX Technologies, Inc., a Canadian corporation located in Toronto;

    J&K Futures, Inc., a company with purported offices in California and New York;

    Kingdom Forex Trading and Futures, Ltd., a Nevada company;

    Prime Forex, LLC, a Delaware LLC;

    Wall Street Brokers, LLC, a Delaware LLC; and

    ZtradeFX LLC, a Connecticut LLC.

    In the forex market, entities known as Retail Foreign Exchange Dealers (RFED) or Futures Commission Merchants (FCM) may buy foreign currency contracts from or sell foreign currency contracts to individual investors. Under the Commodity Exchange Act (CEA) and CFTC Regulations, an entity acting as an RFED or FCM must register with the Commission and abide by rules and regulations designed for investor protection, including those relating to minimum capital requirements, recordkeeping and compliance. Further, with a few exceptions, such an entity also must be registered with the Commission if it solicits or accepts orders from US investors in connection with forex transactions conducted at an RFED or FCM.

    In all but two of the complaints, the CFTC alleges that a defendant acted as an RFED; that is, it offered to take or took the opposite side of a customer’s forex transaction without being registered. In the remaining two complaints, ZtradeFX LLC and FXPRICE, the CFTC alleges that the defendant solicited customers to place forex trades at an RFED without being registered as an Introducing Broker. In every complaint, the CFTC alleges that the defendant solicited or accepted orders from US investors to enter into forex transactions in violation of the Act. The CFTC has moved for preliminary injunctions preventing these defendants from operating unless and until they comply with the CEA and Commission Regulations. The CFTC’s complaints also seek civil monetary penalties, trading and registration bans, disgorgement and rescission.

    The CFTC strongly urges the public to check whether a company is registered before investing funds. If a company is not registered, an investor should be wary of providing funds to that company.

    A company’s registration status can be found at: BASIC Search

    The CFTC also strongly urges members of the public to visit the below websites before investing money in the forex market:

    CFTC Consumer Advisory: Forex Fraud: If it sounds too good to be true, it probably is!

    CFTC Consumer Advisory: Foreign Currency "Forex" Fraud

    Fraud Advisory from the CFTC: Foreign Currency Trading (Forex) Fraud

    CFTC Fraud Advisories - CFTC

    Foreign Exchange Currency Fraud: CFTC/NASAA Investor Alert

    Foreign Currency Trading - CFTC

    The CFTC Division of Enforcement staff members responsible for these cases are: Margaret Aisenbrey, Kathleen Banar, Barry Blankfield, Kim Bruno, Jennifer Chapin, Elizabeth Davis, James Deacon, Jennifer Diamantis, Rick Glaser, Patricia Gomersall, Amanda Harding, Jessica Harris, Paul Hayeck, Lenel Hickson, Rosemary Hollinger, William Janulis, Joseph Konizeski, Jeffrey Le Riche, Charles Marvine, Judith McCorkle, Joy McCormack, Vincent McGonagle, Kenneth McCracken, Stephen Obie, Nathan Ploener, Eliud Ramirez, Stephanie Reinhart, Xavier Romeu-Matta, Christine Ryall, Veronica Spicer, Elizabeth Streit, Manal Sultan, Lara Turcik, Stephen Turley, Richard Wagner and Scott Williamson.

    The CFTC thanks the National Futures Association for its assistance in this matter.

    Last Updated: January 26, 2011

    Media Contacts
    Dennis Holden
    202-418-5088

    Office of Public Affairs

    The original is at www.cftc.gov/PressRoom/PressReleases/pr5974-11.html
     
  2. fxfrench

    fxfrench FXOpen AU Representative

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    Very interesting.

    I will post more info as it comes to hand.
     
    #2 fxfrench, Jan 26, 2011
    Last edited: Jan 26, 2011
  3. Pharaoh

    Pharaoh Colonel

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    That's quite a list. I see some really bad apples in it, but there are some brokers I thought were mostly OK mixed in. I can't wait to see how these cases go.
     
  4. atieno

    atieno Recruit

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    wow.i am shocked to see FXOPEN in that list.
     
  5. Merle

    Merle Recruit

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    Yeah Me too. I don't use fxopen but thought they were a good fx option.:eek:oh:
     
  6. KINGSEUSTACE

    KINGSEUSTACE Recruit

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    Good news. At least, let there be some bites, so that sanity would be in the business, people do all kind of things in the name of Forex. My inbox is continuously filled with craps; initially, I was wondering how they get my email address, but I later discovered it. Thanks for the posting.
     
  7. Ammihud7

    Ammihud7 Private

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    "The CFTC has moved for preliminary injunctions preventing these defendants from operating unless and until they comply with the CEA and Commission Regulations."

    How might this action affect US and Non-USA traders who have accounts with theses brokers?
     
  8. Megaafricans

    Megaafricans Recruit

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    Interesting!

    I am very astonished to see that instaforex and fxopen made this interesting list. I can't wait to see the outcome. :unhappy:
     
  9. Czechdaytrader

    Czechdaytrader Recruit

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    Not suprised

    By seeing FXOPEN on the list . Not going to comment anymore. I am just sure, there will be lots of asking and explanations .
     
  10. alanudi

    alanudi Recruit

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    Looks like they'll need to register with the CFTC. Hopefully there won't be any fines for the 'good' brokers :)
     
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