Defaults begin in 14 CFTC Lawsuits against Forex Firms

As published earlier this week on FX Street, the U.S. Commodity Futures Trading Commission (“CFTC”) announced on January 26, 2011 that it filed 14 enforcement actions against defendants that allegedly acted as a retail foreign exchange dealers (“RFED”) or introducing brokers without registering with the CFTC. At the time the article was published, none of the 14 defendants had yet answered the complaints against them.

Today, two of the sued forex firms are official in default in the lawsuits against them. FX Price, LLC was due to file an answer to the complaint against it by February 16th, and Wall Street Brokers, LLC by the 17th. Neither of these companies have formally responded to the allegations against them. In fact, Wall Street Brokers failed to appear at a hearing on February 2nd on the CFTC’s request for a preliminary injunction to prevent Wall Street Brokers from continuing to violate the Commodities Exchange Act (“CEA”). A preliminary injunction was thereafter issued against Wall Street Brokers. A preliminary injunction was also issued against the other defaulting firm, FX Price, on consent.

Another firm, ForInvest, Inc., similarly failed to appear at a preliminary injunction hearing on February 8th in the District Court for the Northern District of Illinois. A preliminary injunction was issued to prevent the firm from continuing to violate the CEA.

Today is also the deadline for a number of the other defendants to answer the lawsuits against them, and a few others are due to respond on February 23rd.

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