CFTC sues 14 FX firms in nationwide sweep

(I got this email from FPA)
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




Delaware is scam broker capital of USA?

Indirectly, maybe you could say that.

Delaware is a general haven for incorporation in the US for many good reasons: taxes, dispute resolution in a court of equity, the smooth-as-silk machinery of the state's offices.

But if you're going to open a bucket shop, there's another thing about Delaware: an anonymous, non-US resident can hold all corporate offices and be the sole shareholder of a Delaware corporation.

OldQ, howcome is you so smart?

Delaware is legally offshore and is a haven for scams. Even some HYIP ponzi scams registered there to claim they are a legally registered business.

Evidently you can register a Delaware company anonymously and avoid any pesky legal entanglements.

There is a thing called civil disobedience. What we do is as a group go to off shore brokers openly and become affiliates for them. Im looking at the wording and trying to find the difference between an affiliate and an IB. But my guess is if you just have a banner on your website are you advertising or soliciting? Two very different things. But I am interested on peoples take as to where is the line from being an IB as opposed to an affiliate. IN the meantime I suggest civil disobedience. Take your money off shore even if the rules do not change your way of trading. I personally don't care too much about the leverage but FIFO just plain sucks.

Why is the CFTC SUING those companies? Simple......
There is no LAW so they are TRYING TO SET PRECEDENCE!

I'm no lawyer but if these brokers were actually breaking laws they would be TRIED in a court of law and fined and imprisoned not SUED. WHEN YOU ARE sued THERE HAS TO BE AN INJURED PARTY. WHO IS THE INJURED PARTY?!!!!
The whole thing stinks. They are using the courts again to circumvent the laws

Fully Informed Jury Association
Fully Informed Jury Association. A non profit organization
This is our last stand against a Government gone wild.
Sometimes you have to stand up even if no one else will.

No surprises with FIGfx

a couple of the one on the list does not even have offices in these states. the are just register as a delaware co. if one research forex liquidity llc they too were just undercapitalized of not having $1 million operating cashflow.

so being in a forex brokerage biz and undercapitalized is now a crime.

by the way nothing there is nothing wrong with figfx - great service & fast withdrawal.
what more can one ask for.

Has anyone read about individuals living in America who were sued by the CFTC for promoting or soliciting offshore fx brokers offering leverage over 50 to 1? If the CFTC really wanted to protect the public, they would immediately shut down all lotteries (where the odds are one million to one against you winning) instead of making US fx traders poorer by limiting their leverage to a snail's pace. I wanted to promote high leverage offshore brokers, but now I guess I'm stuck with promoting only slow motion US fx brokers lest the CFTC seek a judgment against me grabbing what few assets I have. People need to write to congressmen demanding that the new, unreasonable Frank-Dodd bill be repealed or at least amended exempting small time traders with assets of less than 5 million dollars. It is hurting individual traders, making this recession even worse.

I wonder if any american citizen was sued by NFA or CFTC for trading forex with offshore forex?

From the above list, ZTradeFX was an IB partner of Instaforex who subsequently disowned them and dumped them on the sidewalk like trash. Some partner they turned out to be.