France’s financial market regulator, the Autorité des Marchés Financiers (AMF), has taken punitive action against Forex Capital Markets (NYSE:FXCM) over violations of its local regulations.
Since September 2014 the French watchdog has been investigating the issue that for a couple of years (between 2009 and 2011) three money managers who hadn’t been regulated were managing the accounts of FXCM clients in France. The trio introduced 113 clients to the broker and FXCM made about €400,000 in commission from them over the years (€393,447.84 to be exact).
As we reported last week, the AMF held a hearing with the broker on October 16 2015 regarding its investigation. Now we have learned that just ten days after the public meeting, on Monday October 26, the regulator’s Enforcement Committee made a decision against the company – the AMF reprimanded FXCM as well as slapped it with a fine of €200,000.
FBS CopyTrade Launches a New Card Scanning Feature!Go to article >>
The AMF says that the brokerage has failed to check whether third parties that managed its clients’ accounts and executed orders on their behalf had the necessary legal approval to provide portfolio management services for the benefit of others. By doing so, “FXCM did not act honestly, fairly and professionally, serving the best interests of customers” and thereby infringed the provisions of the local Monetary and Financial Code.
The regulator’s ruling was also made public on the AMF website in French, adding a reputational cost to FXCM’s brand in France on top of the monetary fine. According to the French law regarding such matters, FXCM may appeal the AMF’s decision, however no indication was given so far that the company plans to do so.
FXCM provided an official comment on issue, saying “this matter pertains to clients back in 2009-2011, the company has since stopped doing business with these firms. The company has also implemented enhanced internal control mechanisms of checking introducing brokers and partner companies.”