What happened is as clear as daylight from the CTFC statement:
FXCM failed to immediately notify the CFTC when it knew or should have known that its adjusted net capital was less than that required under the applicable CFTC regulation and that it was, therefore, undercapitalized. In fact, FXCM never affirmatively gave notice to the CFTC, and it was only after the National Futures Association (NFA) and the CFTC initiated contact that FXCM provided notice of its capital deficiency.
So FXCM broke the law by not initiating contact with the CTFC or NFA the moment they knew about their shortcomings in terms of cash. FXCM however very fast secured a loan to solve the undercapitalization issue, but this didn't matter because the failure to notify their regulator was already done.
What's gonna happen remains to be seen but this is serious stuff and it could have ended far far worse for the customers and the CTFC knows it very well. It's like when there's shots fired in your direction - the "pop" "crack" and "bang" are distant shots, it's the "zing" sound that is above your head and will eventually get you. And that zing was on Jan 15 2015 for FXCM clients.
FXCM failed to immediately notify the CFTC when it knew or should have known that its adjusted net capital was less than that required under the applicable CFTC regulation and that it was, therefore, undercapitalized. In fact, FXCM never affirmatively gave notice to the CFTC, and it was only after the National Futures Association (NFA) and the CFTC initiated contact that FXCM provided notice of its capital deficiency.
So FXCM broke the law by not initiating contact with the CTFC or NFA the moment they knew about their shortcomings in terms of cash. FXCM however very fast secured a loan to solve the undercapitalization issue, but this didn't matter because the failure to notify their regulator was already done.
What's gonna happen remains to be seen but this is serious stuff and it could have ended far far worse for the customers and the CTFC knows it very well. It's like when there's shots fired in your direction - the "pop" "crack" and "bang" are distant shots, it's the "zing" sound that is above your head and will eventually get you. And that zing was on Jan 15 2015 for FXCM clients.
Best regards, Zef