Gain Capital Wins Appeal Claim with CFTC
In a judgment earlier this month, the CFTC decided in favor of an appeal from Gain Capital in the case
In a judgment earlier this month, the CFTC decided in favor of an appeal from Gain Capital in the case of Robert West vs Gain Capital. The appeal rejected an earlier decision that Gain was responsible to pay West reparations in regards to ‘recklessly fail(ing) to disclose material facts to its customer’.
The case revolves West’s trading activity in 2010. At the time, West had opened deposited $5000 in his Forex.com account with his credit card and had engaged in two speculative positions with the EURUSD. The trades were opened via telephone calls with Forex.com dealers. West suffered liquidation of his account after failing to meet minimal margin requirements.
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Following the losses, West complained to Gain Capital that had failed to inform him of the risks and that the broker closed his positions without his knowledge, and was answered that he had used too much leverage when he was trading. West then contacted the credit card company which reversed the $5000 deposit. He then filed a complaint with the CFTC against Gain Capital and sought a refund of $5000, plus $20,000 in potential profits that he had lost due to his account being liquidated. After judging on the case, Gain Capital was found to be at fault for omitting to West the risks involved with positions and he was awarded the full $20,000 in reparations.
Appealing the case, Gain Capital brought the judgment to the CFTC which disagreed with the ruling and concluded
“We reverse the Judgment Officer’s award of speculative profits. We hold that the evidence in the record does not support a conclusion that Gain Capital violated section 4b of the Commodity Exchange Act. We further hold that, even if Gain Capital had violated section 4b in connection with West’s purchase of the second contract, West was at most entitled to an award of his out-of-pocket losses. Since Gain Capital voluntarily refunded that amount to him, there is no additional remedy that we can award. Accordingly, we reverse the Initial Decision and dismiss this matter with prejudice.”
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The CFTC based their decision on three reasons:
1)The initial ruling was based on ‘Fraud by Omission’. The CFTC didn’t believe that Gain had acted recklessly and omitted information that led to West being misled, as he had provided information that related to his understanding of the market.
2)The CFTC rejected West’s claim that Gain was supposed to contact him and inform him of the margin call as well as that the broker was not allowed to close his positions without his permission. The CFTC stated that Gain had no obligation to provide a margin call as well as that they had permission to liquidate his account.
3)The CFTC also added that West incurred no ‘out of pocket’ expenses and was even refunded his initial $5000 deposit. Therefore, even if the CFTC accepted that Gain had committed fraud, West wouldn’t merit to receive reparations.
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If Gain would have had to pay the 20K, that would have been quite the farce..
If Gain would have had to pay the 20K, that would have been quite the farce..
Totally – the fact that these cases even get heard are ridiculous.
Totally – the fact that these cases even get heard are ridiculous.
The Judgement Officer who made the original ruling should be fired.
The Judgement Officer who made the original ruling should be fired.
It just shows the politicalness by which these cases are being handled. In Europe (and the UK) the bank always asks the client if they have any knowledge of the transaction having been charged to their card. if the client answers “no” and as in this case has opened an account, the credit card company will charge the client with fraud as the client is omitting the truth of his actual actions. Long story short, the Credit card company in america is to blame for this in the first place as they give way for a case like this.
It just shows the politicalness by which these cases are being handled. In Europe (and the UK) the bank always asks the client if they have any knowledge of the transaction having been charged to their card. if the client answers “no” and as in this case has opened an account, the credit card company will charge the client with fraud as the client is omitting the truth of his actual actions. Long story short, the Credit card company in america is to blame for this in the first place as they give way for a case like this.
C’mon Ron really that these cases get heard are ridiculous. if you knew the full court press some retail firms go thru to stonewall and harass customers you would be mortified.
There is a process, save the hyperbole.
C’mon Ron really that these cases get heard are ridiculous. if you knew the full court press some retail firms go thru to stonewall and harass customers you would be mortified.
There is a process, save the hyperbole.
been there done that myself and the degree of obfuscation and bullying firms do around bad ticks, offmarket pricing is criminal, if it happened outsoide the confines of the broker/customer relationship it would be outright thievery instead of “aggressive pricing”
been there done that myself and the degree of obfuscation and bullying firms do around bad ticks, offmarket pricing is criminal, if it happened outsoide the confines of the broker/customer relationship it would be outright thievery instead of “aggressive pricing”
Did you read the complaint? The client in this case does not claim an offmarket fill or anything like that. He said Gain didn’t explain the risk – albeit signing off on the fineprint from the account openening docs, and that the broker did not inform him when they liquidated his position because of margin deficiency. Again, clearly not understanding (or claiming not to understand) the papers that he signed. A fool and his money.. By the way, filing bs claims with the NFA can be expensive. There was this case of a guy whose futures account ended up with… Read more »
Did you read the complaint? The client in this case does not claim an offmarket fill or anything like that. He said Gain didn’t explain the risk – albeit signing off on the fineprint from the account openening docs, and that the broker did not inform him when they liquidated his position because of margin deficiency. Again, clearly not understanding (or claiming not to understand) the papers that he signed. A fool and his money.. By the way, filing bs claims with the NFA can be expensive. There was this case of a guy whose futures account ended up with… Read more »