Washington, D.C. – Forex Capital Markets LLC (FXCM) will pay $14.26 million in penalties and restitution for failing to adequately supervise its forex trading platforms and for obstructing a CFTC investigation, the Commodity Futures Trading Commission announced today, October 3, 2011.
The CFTC order requires FXCM, a New York-based registered retail foreign exchange dealer and futures commission merchant, to pay a $6 million civil monetary penalty and $8,261,937 in restitution to affected customers. Additionally, FXCM must retain a monitor, at its own expense, for three years to oversee trade execution practices and compliance with restitution obligations.
The investigation, spanning from June 18, 2008, to December 17, 2010, revealed that FXCM failed to diligently supervise how its personnel handled over 57,000 customer accounts. This lack of oversight resulted in customers not benefiting from favorable price movements while being subjected to detrimental ones, ultimately costing them approximately $8,261,937, which FXCM profited from.
According to the CFTC, diligent supervision would have allowed FXCM to identify and correct trade integrity issues before customer harm occurred. The order also found that FXCM initially failed to promptly produce records requested by the CFTC’s Division of Enforcement, necessitating a subpoena to obtain the necessary information.
The National Futures Association (NFA) also took action against FXCM, issuing a decision on August 12, 2011, imposing a $2 million monetary sanction for similar practices. The CFTC acknowledged the NFA’s assistance in the matter.
The case was led by CFTC Division of Enforcement staff members Charles Marvine, Christopher Reed, Rachel Hayes, Stephen Turley, Rick Glaser, and Richard Wagner.
Source: CFTC.gov
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