The U.S. Commodity Futures Trading Commission (CFTC) has imposed a $7 million fine on one of the largest brokers, Forex Capital Markets, LLC. Oddly enough, the broker allegedly provided false information to clients. But this was not enough for the regulator – the broker would leave the territory of the United States forever, as well as the head of the broker, Drew Neave.
The accusation was made against the company itself, as well as against two of its employees – Drew Neave and William Adout. The company allegedly misinformed customers and partners. The broker concealed from its clients its connection with one of the most important market makers in the field.
The Commodity Futures Trading Commission is the central government body of the United States of America, which oversees the implementation of the Commodity Exchange Act.
The Commission’s stated mission is to protect market participants and their clients from fraud and abuse in commodity and financial futures and options trading, and to promote a competitive and financially significant futures and options market. The Commission’s supervision and regulation enable markets to play an effective role in the economy by providing tools for price determination and means to compensate for price risk
So, the fine has been issued, the broker is deprived of the opportunity to work in the United States.
And the broker is one of the largest Forex brokers. Its share in the domestic market was 34%, however, now it will decrease. And it is not yet clear what consequences such sanctions of the American regulator will have for the foreign exchange market.
The company is going to sell all its accounts. The buyer is already known – it will be GAIN Capital Holdings, but the companies have not yet agreed on the amount of the transaction. Moreover, this transaction will require the permission of the same American regulator.
But the funds that the broker intends to receive have already been distributed – to pay a fine and cover debts.
As long as all these procedures are carried out, FXCM will continue.
But these troubles should not affect the foreign business of the company, the broker’s management decided. However, time will tell, since the United States is a significant market.
Tagged with: Forex Broker • FXCM
