The NFA has filed a complaint against IKON Global Markets and its CCO Diwakar Jagannath for failing to cooperate with the regulator’s 2012 audit. The complaint comes as IKON’s US based subsidiary, is in the process of fully withdrawing from the US. Having previously been licensed as a forex dealer, IKON was charged in 2010 for using asymmetrical price slippage settings on its forex trading platform. The case was settled with the NFA, with IKON agreeing to pay $320,000 fine and refund customers the slippage amounts. The broker then exited the US as a forex broker, but held onto its FCM license until this year.
The current complaint stems from the NFA’s conducting of a 2012 audit of IKON. According to the NFA, IKON failed to cooperate and produce certain records that were required for the audit. In its initial audit in 2012, the NFA found that IKON had failed to properly calculate its Adjusted Net Capital as it failed to included “the firm’s proprietary exposure in computing the haircut charge on open forex call positions”. Including the ‘haricut’ resulted in a reduction of $3.3 million in its Adjusted Net Capital. Additionally, the audit revealed that a major IKON affiliate, Quasar FX, was not reporting margin correctly. The audit also found that IKON’s AML policies were lacking.
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In the NFA’s complaint, it was cited that the “most serious deficiency” was IKON’s failure to provide records of in relation to several foreign affiliates; Quasar FX (Bermuda), IKON Capital (English), IKON Finance (English), IFSCL (New Zealand). In its findings, the NFA found that the affiliates shared common shareholders and unusual deposit/withdrawals and trading activities. For example, IKON created a Spot Gold futures contract that was traded on the NASDAQ OMX with IKON as the sole market maker. The product was only traded by one customer; Quasar FX, thus indicating ‘wash trading’ was taking place.
In response to these findings, the NFA requested further records, including bank and trading statements from IKON and its CCO Jagannath. After failing to provide information, the NFA was contacted by an IKON attorney that informed them that the broker was closing its FCM business. The NFA responded that the requests for further information are outstanding and will affect IKON’s ability or its CCO to become members again with the NFA. They added that following the proceedings of the complaint, IKON and Jagannath may be subject to penalties which include a monetary fine, censure, suspension, and o expulsion.