The CFTC has filed and settled charges against a registered Retail Foreign Exchange Dealer (“RFED”) for failing to diligently supervise customer accounts traded on its platform. The firm has been ordered to pay over $14.2 million in civil monetary penalty and restitution .
According to the CFTC, from June 2008 to December 2010, the RFED did not adequately supervise the handling of over 57,000 accounts by its officers, employees, and agents. Because of this failure, the firm prevented its customers from benefiting from price movements in their favor, but allowed its customers to lose during detrimental price movements. The Commission believes that the RFED should have discovered this problem and corrected it before its customers lost over $8 million.
Furthermore, the CFTC order settles allegations that the firm did not produce records promptly to the Enforcement Division, forcing the Commission to issue a subpoena. In addition to the $14.2 million penalty, the RFED must retain a monitor to review for three years: (1) its trade execution practices and policies related to the change in price between the time the customer places the order and the time the order is executed and (2) its compliance with its restitution obligation. The firm has already been disciplined by the NFA.