Windsor Brokers becomes the latest broker to settle with CFTC for accepting US forex clients

The list is getting longer and longer: On February 29th 2012 Enfinium settled with the CFTC, FXOpen and InterForex did the

The list is getting longer and longer:

On February 29th 2012 Enfinium settled with the CFTC, FXOpen and InterForex did the same earlier this year.

Join the iFX EXPO Asia and discover your gateway to the Asian Markets

It seems there’s a clear distinction now between two types of firms sued by the CFTC: those that care and those that don’t. Those that care settled, others chose not to.

There are many reasons why a firm should settle – public image, regulatory processes in other jurisdictions, ability for owners/directors to travel to the US and the relatively low fine. However there are also reasons why not to settle: foreign firms cannot be really touched by the CFTC and those firms can keep accepting US clients who are keen to trade with a foreign forex broker.

Suggested articles

How Astra’s Decentralized Compliance Layer Fills a Legal Protection GapGo to article >>

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.

Windsor Brokers today became the latest broker to settle with the CFTC. It’s interesting to see that Windsor was accepting american forex clients as late as November 2011 – thus undeterred by the first round of suits against foreign brokers accepting US forex traders.

Commodity Futures Trading Commission (CFTC) obtained a federal court consent order requiring Windsor Brokers, Ltd. (Windsor), of Limassol, Cyprus, to pay a $140,000 civil monetary penalty to settle CFTC charges. Windsor unlawfully solicited U.S. customers to engage in foreign currency (forex) transactions and operated as a Retail Foreign Exchange Dealer (RFED) without being registered with the CFTC (see CFTC Press Release 6108-11, September 8, 2011).

The consent order, entered on March 6, 2012, by Judge Elaine E. Bucklo of the U.S. District Court for the Northern District of Illinois, permanently bars Windsor from engaging in any conduct that violates the Commodity Exchange Act (CEA) and CFTC regulations, as charged. The order also directs Windsor to prominently display a notice on its website that Windsor does not provide services for U.S. customers.

Specifically, the order finds that beginning on October 18, 2010, and continuing until November 30, 2011, Windsor solicited orders from low net worth (non-ECPs) U.S. customers to open leveraged forex trading accounts through its website. The order finds that Windsor acted as an RFED by offering to be, and acting as, a counterparty buying and selling forex contracts with U.S. customers without being registered as an RFED. According to the order, Windsor liquidated all of its U.S. customers’ accounts, and no U.S. customers have any open accounts at Windsor.

Got a news tip? Let Us Know