Forex Capital Markets LLC Ordered to Pay More Than $14.2 Million to Settle CFTC Charg

thesaint226

Recruit
Messages
2
Did anyone else see this...

Firm also sanctioned for failing to promptly produce certain records to the CFTC’s Division of Enforcement.
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today issued an order filing and simultaneously settling charges that Forex Capital Markets LLC (FXCM) failed to supervise diligently its personnel’s handling of more than 57,000 customer accounts that traded on FXCM’s forex trading platforms. FXCM is a registered retail foreign exchange dealer and futures commission merchant headquartered in New York, N.Y. The order also settles charges that FXCM failed to produce certain records promptly to the CFTC’s Division of Enforcement during its investigation.

The CFTC order requires FXCM to pay a $6 million civil monetary penalty and restitution of $8,261,937 to its customers and former customers. In addition, the CFTC order requires FXCM to retain, at its own expense, a monitor to review for three years: (1) its trade execution practices and policies as they relate to the change in price between the time the customer places the order and the time the order is executed by FXCM; and (2) its compliance with its restitution obligation.

According to the CFTC order, from at least June 18, 2008 until December 17, 2010, FXCM failed to supervise diligently the handling of customer accounts traded on the FXCM platforms by its officers, employees, and agents with respect to changes in price between order placement and execution on both market orders and margin liquidation orders. The order finds that FXCM’s failure prevented its customers from receiving the benefit of price movements in customers’ favor, but allowed its customers to suffer detrimental price movements. The CFTC order finds that had FXCM diligently supervised its personnel, FXCM would have discovered these problems with its trade integrity and would have had the opportunity to correct them before its customers were deprived of, and FXCM benefitted by, approximately $8,261,937.

Further, the CFTC order finds that FXCM failed to produce certain records promptly in its capacity as a CFTC registrant and thereby required the CFTC to issue a subpoena to attempt to obtain required records from FXCM.

The CFTC thanks the National Futures Association (NFA) for its assistance. On August 12, 2011, the NFA issued a Decision imposing a $2 million monetary sanction against FXCM in settlement of an NFA action (NFA Case No. 11-BCC-016) involving some of the same practices identified in the CFTC order.

CFTC Division of Enforcement staff members responsible for this case are Charles Marvine, Christopher Reed, Rachel Hayes, Stephen Turley, Rick Glaser, and Richard Wagner.

Media Contacts
Dennis Holden
202-418-5088

EDIT: Original CFTC Press Release is here...

http://www.cftc.gov/PressRoom/PressReleases/pr6119-11
 
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Jason Rogers

FXCM Representative
Messages
510
Did anyone else see this...

Firm also sanctioned for failing to promptly produce certain records to the CFTC’s Division of Enforcement.
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today issued an order filing and simultaneously settling charges that Forex Capital Markets LLC (FXCM) failed to supervise diligently its personnel’s handling of more than 57,000 customer accounts that traded on FXCM’s forex trading platforms. FXCM is a registered retail foreign exchange dealer and futures commission merchant headquartered in New York, N.Y. The order also settles charges that FXCM failed to produce certain records promptly to the CFTC’s Division of Enforcement during its investigation....
Hi thesaint226,

The settlement between FXCM and the CFTC was anticipated and previously disclosed on August 11, 2011, during FXCM’s Second Quarter Earnings Conference Call. At that time, the company established a reserve of $16 million in anticipation of the fines associated with the CFTC ($6 million) and the NFA ($2 million) settlements as well as restitution ($8,261,937) credited to affected clients. To date, the NFA fine has been paid and restitution to affected clients has been credited. The NFA and CFTC fines as well as restitution are all covered under that reserve, resulting in no negative impact to the net income of FXCM Inc.

Our full statement can be found here FXCM US Reaches Settlement with the CFTC for $6 Million

-Jason
 
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strangelove

Recruit
Messages
11
So much for those commercials that said they don't take the other side of the trade or trade against you.

Intentionally promoting slippage against a customer is trading against a customer.
 

ForexVerified

Private, 1st Class
Messages
582
What's disturbing is this is common practice among all brokers. They guarantee limit order prices (pending limit orders, and Take Profit limits) but don't guarantee stop orders (pending stop orders, and Stop Losses). According to what I've been told (by various brokers) they do this because that's how the banks/liquidity providers guarantee pricing for the brokers, so they pass it onto us.

Now that FXCM being fined for this practice, I bet all the other brokers in the US are scrambling to fix up their systems to prevent it from happening to them too. But it may be too late.

Isn't it funny that a broker can do something that's perfectly legal and acceptable, also fully disclosed, until suddenly a regulatory authority decides it isn't acceptable and levies penalties against them for it? I assume with no warning?

It's a scary time to be regulated by the CFTC.

Scott Wang
Forex Verified
 

Vigilius

Recruit
Messages
1
What's disturbing is this is common practice among all brokers. They guarantee limit order prices (pending limit orders, and Take Profit limits) but don't guarantee stop orders (pending stop orders, and Stop Losses). According to what I've been told (by various brokers) they do this because that's how the banks/liquidity providers guarantee pricing for the brokers, so they pass it onto us.

Now that FXCM being fined for this practice, I bet all the other brokers in the US are scrambling to fix up their systems to prevent it from happening to them too. But it may be too late.

Isn't it funny that a broker can do something that's perfectly legal and acceptable, also fully disclosed, until suddenly a regulatory authority decides it isn't acceptable and levies penalties against them for it? I assume with no warning?

It's a scary time to be regulated by the CFTC.

Scott Wang
Forex Verified

How's that acceptable? I mean MAYBE it's legal due to some technicality in the fine print. But how is that ACCEPTABLE? If the trade moves against you, they bill you for those pips, if it doesn't they still bill you for those pips. That ain't part of the deal.
 

Laurie Gold

Corporal
Messages
119
I used to trade with FXCM but banged my head against the wall too many times, and I guess finally smartened up, about the slippage and left. It was very unfortunate because I had a great account manager but the unjustified and excessive slippage (bottom/top of the move) forced me elsewhere.
 

Pharaoh

Colonel
Messages
19,722
This is the second time that US clients will be compensated for money that FXCM improperly took and clients of the UK branch will be left out in the cold.

Any bets on whether the FSA will try to catch up and level the playing field?
 

Triantus Shango

Sergeant Major
Messages
1,372
This is how it was when I first started with them back in 2006--actually quite worse then. I keep telling people and yet, still 57K people keep going to the casino. I don't get it.
 

GhostCat

Recruit
Messages
4
I see you guys switched from fxcm..but u never say which broker u went to

where did u go to get a fairer shake?...looking for new broker since leaving fxcm..
Also..for clients of fxcm..did they automatically apply credit..or did you have to contact someone..
I just ckd my acct..and its still at same level..
thanx:eek:oh:
 

cfgstrad

Recruit
Messages
1
Also..for clients of fxcm..did they automatically apply credit..or did you have to contact someone..
I just ckd my acct..and its still at same level..
thanx:eek:oh:
FXCM sent a notice by email (to email on file with account when it was active to "all US clients affected" and has sense credited 4 accounts (they were previously closed accounts) that I had with them. 4 fairly small accounts and the credits were to the tune of $8K.
 
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