In September 2011 CFTC sued 11 forex firms for various violations of its requirements including accepting US forex traders by some firms despite not being registered with the CFTC. This was the second part of what CFTC calls ‘nationwide sweep’ after it sued 14 forex firms earlier that year. Ever since few firms such as FXOpen and InterTrade have settled with the CFTC while firms like InstaTrade and Ztrade didn’t and were virtually penalized.
Enfinium and City Credit Capital were the only properly regulated firms that were sued by the CFTC in this sweep. FXCM too was penalized earlier but quickly settled.
Washington DC – The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court consent order against defendant Enfinium Pty Ltd (Enfinium) of Sydney, Australia, for soliciting and accepting foreign currency (forex) orders from U.S. customers without being registered with the CFTC.
The consent order of permanent injunction, entered February 24, 2012, by Judge Harry D. Leinenweber of the U.S. District Court for the Northern District of Illinois, requires Enfinium to pay an $80,000 civil monetary penalty. The order also requires Enfinium to cease and desist from soliciting and accepting orders from U.S. customers who are not Eligible Contract Participants (ECPs) and offering to act as a counterparty to such customers’ forex transactions until it has registered with the CFTC. The order directs Enfinium to prominently display a notice on its website that Enfinium does not provide services for U.S. customers.
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The order further prohibits Enfinium from trading on any CFTC-registered entity, entering any transactions, controlling or directing trading, or soliciting, receiving or accepting funds for transactions involving commodity futures, options, security futures products, or foreign currency for or from any non-ECP U.S. customers until Enfinium has registered with the CFTC.
The order settles CFTC charges that Enfinium unlawfully solicited U.S. customers to engage in forex transactions and operated as a Retail Foreign Exchange Dealer without being registered with the CFTC (See CFTC Press Release 6108-11, September 8, 2011).
According to the order, from October 18, 2010, the date the CFTC adopted new regulations implementing provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the 2008 Farm Bill requiring retail foreign exchange dealers to register with the CFTC before soliciting or accepting forex orders from non-ECPs, until at least September 7, 2011, Enfinium solicited and accepted orders from such non-ECPs located in the United States.
Specifically, the order finds that Enfinium solicited non-ECP U.S. customers to open forex trading accounts through a website operated by Enfinium’s corporate authorized representative, Vantage FX Pty Ltd, and offered to act as a counterparty to every customer contract. Enfinium stopped accepting U.S. customers after October 18, 2010. However, Enfinium continued to accept orders from U.S. customers who had existing accounts until at least September 7, 2011, according to the order.
CFTC Division of Enforcement staff responsible for this case are David Terrell, Elizabeth M. Streit, Joy McCormack, Scott R. Williamson, Rosemary Hollinger, and Richard Wagner.