The CFTC has won a federal consent order against FXOpen Investments Inc., an offshore company, for failing to register with the Commission. The firm is required to pay $140,000 in civil monetary penalty for soliciting the public to make foreign exchange (“forex”) transactions without registering as a Futures Commission Merchant (“FCM”) or Retail Foreign Exchange Dealer (“RFED”) with the CFTC. FXOpen also must close all U.S. customer accounts, return all U.S. customer funds, and cease violating the CEA and CFTC regulations.
According to the order issued by a U.S. District Court Judge in Illinois, between October 18, 2010, and January 26, 2011, FXOpen acted as an RFED or FCM by taking the opposite side of customers’ forex transactions. However, the firm was not registered with the CFTC. FXOpen also solicited or accepted customer orders to place forex trades.
In the United States, RFEDs and FCMs are the only entities permitted to buy forex contracts from or sell forex contracts to individual investors. There are rules and regulations in place to protect investors and the financial system. Even those entities that solicit or accept orders from U.S. investors in connection with forex transactions conducted at an RFED or FCM must be registered.
Read more about this CFTC enforcement action.
photo credit: cmakin