Forex Capital Markets Ltd. Ordered to Pay $140,000 Penalty to Settle CFT

http://www.cftc.gov/PressRoom/PressR...pr6087-11.html


London-based Forex Capital Markets Ltd. Ordered to Pay $140,000 Penalty to Settle CFTC Charges of Acting as an Unregistered Retail Forex Exchange Dealer




Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today filed and simultaneously settled charges that Forex Capital Markets Ltd. (FXCM Ltd.) of London, U.K. acted as a retail foreign exchange dealer (RFED) by conducting retail leveraged forex transactions with U.S. customers without registering with the CFTC under the agency’s regulation 5.3(a)(6)(i). FXCM Ltd. has never been registered with the CFTC in any capacity.


The CFTC order requires FXCM Ltd. to pay a $140,000 civil monetary penalty and to cease and desist from further violating CFTC regulation 5.3(a)(6)(i).


Today’s action stems from new regulations that the CFTC enacted on October 18, 2010, implementing certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The new regulations also require forex dealers to take steps to protect investors, including maintaining capital and records, to reduce risk and increase transparency. (See CFTC Press Release 5883-10.)


The CFTC order finds that, from October 18, 2010 through October 29, a period of 11 days immediately following implementation of the new regulations, FXCM Ltd. acted as an RFED counterparty to U.S. customers who were non-Eligible Contract Participants in connection with leveraged retail forex transactions without registering as an RFED.


The CFTC’s order emphasizes that the CFTC’s registration requirements for commodity professionals are “a cornerstone of the regulatory framework enacted by Congress to protect the public.” Registration is the “linchpin of the CFTC’s ability to perform its statutory functions of monitoring and enforcing” the Commodity Exchange Act (CEA), and the CFTC has recognized that the operation of an unregistered entity is a “serious violation” of the CEA and a “threat to the integrity of the industry,” according to the order.


CFTC Division of Enforcement staff members responsible for this case are Eugenia Vroustouris, Rick Glaser, and Richard Wagner.

Hi Pound Trader,

Last year, there was an 11 day delay in repatriating US residents from FXCM UK back to FXCM US. To refresh everyone's memory, the repatriation was a result of the Dodd-Frank act requiring that brokers accepting US residents to be regulated with the CFTC/NFA. The CFTC required the repatriation to be completed by October 18, 2010; however, at the same time, the Financial Services Authority (FSA), FXCM UK’s regulator, required individual consent from each account holder before FXCM UK could initiate a transfer. In seeking to comply with the FSA requirement and prevent disruption to clients' open positions, FXCM UK missed the CFTC’s deadline for completing the process as it sought to properly notify affected clients and conduct transfers in a timely and orderly fashion.

We regret the brief 11 day non-compliance in repatriating US residents, but the delay meant that the impact on our clients trades was minimized (as opposed to forcefully closing trades and being in non-compliance with UK regulations) and ensured a smooth transition of accounts from FXCM UK to FXCM US.

Our full statement can be found here http://ir.fxcm.com/phoenix.zhtml?c=2...217&highlight= . Please feel free to let me know if you have any questions.

-Jason

I totally stumbled on this post but it answered a question I've had since my FXCM UK account became inactive. I didn't know that whole process was happening, all I remember is receiving emails from FXCM say I could open a UK account, then after I got signed on and opened, a few weeks later I was told the account would become inactive.
So now I know what happened and why. Too bad for FXCM, but I will say, I've been with them for since 2006 and they've come a long way. I've thought about looking into other platforms, but especially in the early days, but now I don't think I would switch, their live education is a great supplement and they seem to be OK now.