A press report in France this morning has asserted that FXCM France could be facing a regulatory fine over an alleged violation. Online news agency L’Agence économique et financière (L’Agefi) has published an article reporting on some traders who suffered losses while holding FXCM accounts.
Finance Magnates has learned that the French financial regulator, Autorité des Marchés Financiers (AMF), held a hearing last Friday at which it heard the position of FXCM France on the matter.
Between 2009 and 2011, a trio of money managers who hadn’t been regulated were clients of FXCM France. The AMF’s position is that the brokerage should have known that these three are not permitted to carry out transactions on behalf of third parties.
The regulator could be looking into a fine and reimbursement for profits that FXCM France has made from the losses of the unregulated money managers.
Ready to kick-off your Trading Game with Manchester United?Go to article >>
If we take a cue from the endless stream of fines imposed by the U.S. Commodity Futures Trading Commission (CFTC) on unregulated money managers, a number of brokers should have been fined in the aftermath of similar cases.
Finance Magnates reporters reached out to FXCM for an official comment. The company stated: “No official decision has been announced, and the firm has since then stopped doing business with these firms.”
The assertions made by the AMF that the broker should have been aware that the money managers were carrying out unregulated activities are a long shot if we look at comparable cases in other jurisdictions. However, in the end it is up to the French authorities to ascertain whether there has been any wrongdoing on the part of the broker.
Wrongdoing on the part of FXCM would be difficult to prove. Considering that the broker is a utility company which provides its clients with access to the market, an AMF fine would be tantamount to an internet service provider being liable for damages that hackers cause to third parties while using its services.
A final decision from the regulator is expected in the coming weeks.