FXOpen Investigated By CFTC

CFTC finally uncovers FXOpen's ploy; working as an unregistered forex dealer.

Illinois Federal Court Imposes $140,000 Civil Monetary Penalty on Foreign
Currency Firm, FXOpen Investments Inc., for Acting as an Unregistered Retail
Foreign Exchange Dealer

Action part of CFTC's nationwide sweep against foreign currency firms for
failure to register under the 2008 Farm Bill, the Dodd-Frank Act, and CFTC
regulations

WASHINGTON, DC - The U.S. Commodity Futures Trading Commission (CFTC) has
obtained a federal court consent order requiring defendant FXOpen Investments
Inc. (FXOpen), a foreign firm, to pay a $140,000 civil monetary penalty...

Story attached.

http://www.cftc.gov/PressRoom/PressReleases/pr6164-12


January 5, 2012

Illinois Federal Court Imposes $140,000 Civil Monetary Penalty on Foreign Currency Firm, FXOpen Investments Inc., for Acting as an Unregistered Retail Foreign Exchange Dealer

Action part of CFTC’s nationwide sweep against foreign currency firms for failure to register under the 2008 Farm Bill, the Dodd-Frank Act, and CFTC regulations

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) has obtained a federal court consent order requiring defendant FXOpen Investments Inc. (FXOpen), a foreign firm, to pay a $140,000 civil monetary penalty to settle CFTC charges that it illegally solicited members of the public to engage in foreign currency (forex) transactions and operated as a Retail Foreign Exchange Dealer (RFED) without being registered with the CFTC (see CFTC Press Release 5974-11, January 26, 2011).

The order, entered on December 22, 2011 by Judge Virginia M. Kendall of the U.S. District Court for the Northern District of Illinois, also orders FXOpen to close all U.S. customer accounts and return U.S. customer funds. The order also permanently bars FXOpen from engaging in any conduct that violates the Commodity Exchange Act (CEA) and CFTC regulations.

Specifically, the order finds that between October 18, 2010, and January 26, 2011, FXOpen acted as an RFED by taking or offering to take the opposite side of customers’ forex transactions without being registered as an RFED, which is in violation of CFTC regulations. The order also finds that during the same time period, FXOpen solicited or accepted customer orders to place forex trades without being registered, which is in violation of the CEA.

In the forex market, entities known as RFEDs or Futures Commission Merchants (FCMs) may buy forex contracts from, or sell forex contracts to, individual investors. Under the CEA and CFTC regulations, an entity acting as an RFED or FCM must register with the CFTC 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 CFTC if it solicits or accepts orders from U.S. investors in connection with forex transactions conducted at an RFED or FCM.

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: www.nfa.futures.org/basicnet.

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

CFTC Consumer Advisory: Forex Fraud

If it sounds too good to be true, it probably is!

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

Foreign Exchange Currency Fraud: CFTC/NASAA Investor Alert

The CFTC Division of Enforcement staff responsible for this action are Stephanie Reinhart, Joseph Konizeski, Judith McCorkle, Scott Williamson, Rosemary Hollinger, Rick Glaser, and Richard Wagner.

Seriously guys I'm more and more fan of US regulators. They are the only one arround kicking brokers. FSA didn't crack down on forex brokers like NFA/CFTC did!

13

Alpari UK got hit by FSA:

http://www.forexfactory.com/showthread.php?t=235120

Thanks ONU for the link, but FSA didn't crack down over virtual dealer plugin & slippage use. Watch last time FXCM fined by NFA for slippage & they paid only US customers thanks to FSA!

13

Sure they might do a little good for the traders BUT come on they prevent all traders residing in the USA from trading with a foreign broker and they restrict the "little guys" trading by only offering leverage of 50:1 or less. I'm a big boy and don't need ANYONE telling me who I can or cannot trade with or how I need to trade. To do that is wrong, wrong, wrong...

Is FXOpen the only broker amongst the many named in an earlier CFTC release to actually be man enough to come forward and face the CFTC music?

At least they weren't fined to doing shady stuff like FXCM for example who have been fined by the NFA for shady dealings and malpractice.

All FXOpen is guilty of here is not registering with the CFTC before accepting US clients.

One of my accounts is with Oanda. 1:50 isn't so hard to deal with. You can still make money with that restriction.

It is really surprising news for me because recently fxOpen registered in Australia.

Hi Jaajar,

FXopen not being fined by NFA/CFTC over virtual dealer doesn't mean it's clean. FXOPEN is just not regulated by NFA/CFTC so they can't enforce their rules over that.

FXOPEN remain off shore broker escaping regulation... ( even if IT JUST registered in australia).

Still agree this fine is just a small slap and not a big issue.

13

Never used hedge or felt the need of using it... Yep leverage can help if you want a small account but you can add more money & trade same risk. I thought before I would not be able to trade account without 400:1 now I see I can & it's not a problem in fact BUT still not using US broker here.

But agree at one point here preventing you from using foreign brokers sucks a bit. As some good brokers would be outside US & restrict choice for US customers.

But still I think that some US IB can introduce you to European brokers like LMAX despite you can't trade with them directly.

13

Why is all the focus on FXOpen anyway? Any word on what the other 24 brokers mentioned in the 2 CFTC actions last year are doing about it?

I can't see why the word 'Scam' should be in the title of this thread. FXOpen were fined by CFTC for being unregistered. Remember FXCMUK was also fined for same offence some time ago when they failed to transfer their U.S. clients accounts on time. Does that make FXCM a scam? I think not.