Washington, D.C. – The Commodity Futures Trading Commission (CFTC) settled charges against FXDirectDealer, LLC (FXDD) for failing to comply with minimum financial requirements, according to an order issued September 30, 2013. The CFTC alleges that between November 2010 and December 2012, FXDD, a CFTC-registered Retail Foreign Exchange Dealer (RFED) and Futures Commission Merchant (FCM) headquartered in New York, New York, repeatedly violated capital adequacy rules.
The CFTC adopted rules in October 2010 mandating that RFEDs and FCMs offering retail forex transactions maintain an adjusted net capital of $20 million or more. The agency found that FXDD failed to meet these requirements for at least 18 months during the specified period, falling short by over $7.5 million at one point.
The order states that FXDD reported adjusted net capital on a consolidated basis with its subsidiary, leading the company to believe it was adequately capitalized. However, on a standalone basis, FXDD consistently failed to meet the required adjusted net capital requirements throughout most of the period in question.
As a result of these violations, FXDD will pay a $275,000 civil monetary penalty and is subject to a cease and desist order. The CFTC noted that the company’s cooperation and subsequent corrective actions were considered during the settlement process.
The CFTC acknowledged the assistance of the National Futures Association in the investigation. Staff members involved in the case included Rachel Hayes, Thomas Simek, Charles Marvine, Rick Glaser, and Richard Wagner from the Division of Enforcement, along with Kevin Piccoli, Ronald Carletta, Robert Loeber, and Nicholas Chiacchere from the Division of Swap Dealer and Intermediary Oversight.
Source: CFTC.gov
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