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NFA fines FXCM $2MM plus orders refunds to customers
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NFA fines FXCM $2MM plus orders refunds to customers

  #1 (permalink)
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NFA fines FXCM $2MM plus orders refunds to customers

Source: NFA levies $2,000,000 monetary sanction against FXCM and orders refunds to customers


NFA

For Immediate Release
August 12, 2011
For more information contact:
Larry Dyekman (312) 781-1372, ldyekman@nfa.futures.org
Karen Wuertz (312) 781-1335, kwuertz@nfa.futures.org

NFA levies $2,000,000 monetary sanction against FXCM and orders refunds to customers

August 12, Chicago - National Futures Association (NFA) has issued a Decision imposing a $2,000,000 monetary sanction against Forex Capital Markets LLC (FXCM) in settlement of a Complaint issued by NFA's Business Conduct Committee on August 12, 2011. The Complaint cited FXCM for retaining gains derived from asymmetrical positive price slippage; failing to adopt or carry out adequate procedures to ensure the efficient execution of all customer orders; failing to treat all customers equally when giving price adjustments; failing to adequately investigate suspicious activity in several customers' accounts; and - together with its principal Dror Niv - failing to supervise. FXCM is a Futures Commission Merchant, Retail Foreign Exchange Dealer, and Forex Dealer Member located in New York, New York.

In addition to the $2,000,000 monetary sanction, FXCM must credit the accounts of its customers the amount of asymmetrical positive slippage which its customers experienced on their trades from and after June 18, 2008 and provide verification to NFA of these credits. In the future, FXCM is prohibited from engaging in price slippage or margin liquidation practices, as described in the Complaint. FXCM must also enhance existing procedures to ensure efficient execution of customer orders and compliance with NFA's anti-money laundering requirements.

The complete text of the Complaint and Decision can be found on NFA's website (NFA - National Futures Association).

NFA is the premier independent provider of innovative and efficient regulatory programs that safeguard the integrity of the futures markets.

PDF of the filing is attached.

Mike

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  #3 (permalink)
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FXCM


B.E.A.U.TIFUL, Let that be a lesson to all FX dealers, keep it above board and fair! Bravo!

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  #4 (permalink)
Fortitudo et Honor
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Why do I have the feeling that they'll just find other ways to screw customers or declare bankruptcy, shut down, and restart under another name?

I'm willing to be that the restitution equivalent to the asymetrical slippage is far greater than a $2M fine.

"A dumb man never learns. A smart man learns from his own failure and success. But a wise man learns from the failure and success of others."
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  #5 (permalink)
Fortitudo et Honor
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Think of it this way....

If 1 in 100 orders had a fraudulent bias with respect to slippge (1 tick).....

How many orders does FXCM process since 2008?

This is gonna be a kick in the ding ding.....simply because it's going all the way back to 2008 and the books have been closed on that money for years.

I wouldn't be surprised if they go bankruptc.

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  #6 (permalink)
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This is very interesting. Forex.com got caught on the same charges just a year ago!

I personally have lost over 100K to forex brokers and I believe a great majority was my fault, but quite a bit was due to 'game playing'.

The forex business is such a criminal activity it amazes me. You will find most forex companies in the US have partners that have very 'un-American' last names and I always wonder if they are somehow started by some Russian Mafia type entity or group. Not to sound un-European, but I just find that an interesting thing when everyone is named "YURI" as I have spent time in Communist countries and to me a forex company is run just like a corrupt communist regime.

It would be great if all FOREX was traded on a collective 'book' or 'exchange'. I would then reenter the market.

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  #7 (permalink)
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I don't believe there is any danger in FXCM going bankrupt. The fine didn't even come out of the coffers, instead the partners all got together and paid the fine out of their own monies from my understanding.

I believe I read that FXCM has $200MM cash on hand.

Above info is coming from @Jason Rogers, an FXCM representative.

I think the real issue at hand is a more fundamental one. I can imagine that all the regulatory items are complex, to put it mildly, but I don't believe that asymmetrical slippage is one of those areas where FXCM didn't know better...

Mike

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  #8 (permalink)
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Interesting...I got an E-mail the other day from them telling me about money they we're giving me...now I know why

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  #9 (permalink)
Fortitudo et Honor
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Big Mike View Post
I don't believe there is any danger in FXCM going bankrupt. The fine didn't even come out of the coffers, instead the partners all got together and paid the fine out of their own monies from my understanding.

I believe I read that FXCM has $200MM cash on hand.

Above info is coming from @Jason Rogers, an FXCM representative.

I think the real issue at hand is a more fundamental one. I can imagine that all the regulatory items are complex, to put it mildly, but I don't believe that asymmetrical slippage is one of those areas where FXCM didn't know better...

Mike

True Mike, but I'm thinking the restitution number will dwarf the fine. Like I said, if FXCM was truly involved in rigging slippage against its customers, that number could be anything from large to staggering, especially when you consider it goes retroactive all the way back to '08.

I mean, even 1% of the revenue over the last 4 years is probably a gawdy number.

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  #10 (permalink)
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Partners paid restitution as well, did not come out of FXCM's coffers, based on my understanding.

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

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