Fort Myers-based Southwest Group, LLC has been slapped with a $75,000 penalty by the Commodity Futures Trading Commission (CFTC) for operating as an unregistered retail foreign exchange dealer. The CFTC issued an order on July 20, 2020, detailing the violations and requiring Southwest Group to immediately cease and desist from further breaches of the Commodity Exchange Act and related regulations.
The investigation revealed that between April and September 2018, Southwest Group facilitated forex transactions involving Vietnamese Dong and Iraqi Dinar to retail customers across the United States. These customers were deemed ineligible to participate as contract participants, meaning they didn’t meet specific financial criteria for such investments.
Southwest Group enticed customers with a “Premium + Layaway Program,” offering financing for these forex transactions. However, the CFTC found that Southwest Group acted as the counterparty in these deals, essentially financing the trades themselves. This practice, coupled with significant delays in delivery – customers waited 30 to 45 days to receive their forex instead of the standard two days – formed the basis of the fraud charge.
The CFTC emphasizes the importance of verifying a company’s registration status before investing. Unregistered firms pose a significant risk to investors, and the agency encourages the public to utilize resources like NFA BASIC to check a company’s credentials.
The case was led by CFTC Enforcement staff members Timothy J. Mulreany, Kassra Goudarzi, Paul G. Hayeck, and George Malas. The order highlights the CFTC’s ongoing efforts to regulate the forex market and protect retail investors from fraudulent schemes.
Source: CFTC.gov
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