EURUSD News by Allie Longford on 20:21 February 06, 2017 EST
Yet another forex broker scandal emerges as FXCM agrees to withdraw its registration and never to seek re registering ever again with the CFTC, effectively banning it from operating in the United States.
The US regulator fined on Monday Forex Capital Markets, parent FXCM Holdings LLC and founding partners to pay $7 million to settle charges as it was accused of defrauding retail traders while engaging in false and misleading solicitations. The figure is puzzling as the CFTC on its findings reports the revenue generated from the operations under investigation totalled $77 million.
FXCM was also accused of making false statements to the National Futures Association in order to conceal FXCM's role in the creation of its principal market maker as well as the fact that the market maker's owner had been an FXCM employee and managing director.
The CFTC said in a statement that "between Sept. 4, 2009 though at least 2014, FXCM engaged in false and misleading solicitations of FXCM’s retail customers by concealing its relationship with its most important market maker and by misrepresenting that its 'No Dealing Desk' platform had no conflicts of interest with its customers."
FXCM is currently the largest Retail Foreign Exchange Dealer and had already been involved in disputes with customers after issues originating due to high volatility of the Swiss franc after the SNB lifted the floor on the EURCHF lower exchange rate peg in 2014. Its parent company had to provide a lifeline to the broker after the event.
Following the CFTC order, the National Futures Association (NFA) also determined a permanent ban on FXCM and its founders.
The full CFTC order can be found here: http://www.cftc.gov/idc/groups/public/@lrenforcementactions/documents/legalpleading/enfforexcapitalorder020617.pdf
Have you ever traded with FXCM? How was your experience? Please leave your comments below.