US Courts Fine FxOpen $140,000 and Order them to Cease Operations in the US

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In a press release yesterday, it was learned that the US Federal Court fined FXOpen Investments $140,000 as Civil Monetary Penalty for Acting as an Unregistered Retail Foreign Exchange Dealer. The US under the Frank-Dood Act of the Farm 2008 amendment.

Recently, the US has been cracking down on unregistered foreign exchange investment companies advertising in the US via the internet and registered US citizens as clients.

Recently, this notice was posted on the FxOpen website.

Dear Customers,

Please, be notified of the important changes in the company’s policy.

In order to fully comply with the CFTC regulations FXOpen does not provide services to residents of the United States of America.

Best Regards,
FXOpen Team

“In the forex market, entities known as RFEDs or Futures Commission Merchants (FCMs) may buy forex contracts from, or sell forex contracts to, individual investors. Under the CEA and CFTC regulations, an entity acting as an RFED or FCM must register with the CFTC and abide by rules and regulations designed for investor protection, including those relating to minimum capital requirements, recordkeeping, and compliance. Further, with a few exceptions, such an entity also must be registered with the CFTC if it solicits or accepts orders from U.S. investors in connection with forex transactions conducted at an RFED or FCM.

The CFTC strongly urges the public to check whether a company is registered before investing funds. If a company is not registered, an investor should be wary of providing funds to that company.”

The CFTC has posted an advisory message on their site, updating investors on how to spot frauds, unregistered companies and how to protect themselves.

Their guide is as follows:

The CFTC has witnessed a sharp rise in foreign currency trading scams in recent years and advises potential customers to be aware of the potential for fraud.

The CFTC has jurisdiction and authority to investigate and take legal action to close down unregulated firms offering or selling foreign currency futures and options contracts to the general public. The CFTC also has jurisdiction to investigate and prosecute foreign currency fraud occurring in its registered firms and their affiliates.

LEGITIMATE FOREIGN CURRENCY OPERATIONS
Generally foreign currency futures and options contracts may be traded legally on an exchange or board of trade that has been approved by the CFTC.

Even where currency trading does not occur on a Commission-approved exchange or board of trade, the trading can be conducted legally where, generally speaking, one or both parties to the trading is (or is a regulated affiliate of) a bank, insurance company, registered securities broker-dealer, futures commission merchant or other financial institution, or is an individual or entity with a high net worth.

The CFTC has jurisdiction over forex firms and their transactions that do not fall into the categories of regulated entities outlined above and engage in foreign currency futures and options transactions with or for retail customers who do not have a high net worth.

TWO KINDS OF FOREX FRAUD ARE COMMON

  • Unregulated firms offering/selling foreign currency futures and options contracts to the public, and
  • Forex fraud by registered firms and affiliates

Be skeptical when promoters of forex trading claim their services or account management will earn high profits with minimal risks or that you can get wealthy quickly by working as a currency trader.

Be very careful if you are solicited by a company claiming to trade foreign currencies and be especially careful if such a company asks you to commit money for forex trading.

Most forex companies are registered and legitimate, remember the old adage, if it seems too good to be true it probably is.

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About: FX Empire Analyst - Barry Norman

Barry produces a private Daily Market Review newsletter that is distributed around the globe to over 25,000 subscribers and recently published a book on Options Trading that is available from amazon.com

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Suzanne

Just like the US to be sticking their nose into everything it doesn’t need to be. Canada isn’t too far behind!