Popular copy trading platform ZuluTrade is facing new complaints from the American regulatory body supervising forex dealers and introducing brokers, the U.S National Futures Association (NFA). ZuluTrade is accused of possibly violating some of its requirements as a registered IB according to an NFA document filed April 28, 2016.
The first count of the complaint is regarding failure to comply with minimum capital requirements. The background to this is that back in 2014 ZuluTrade was fined $350,000 for opening accounts for individuals from US sanctioned countries.
The main issue of the first count is: ”At the end of 2014, $180,564 of the fines Zulu incurred as a result of the OFAC and CFTC actions remained outstanding. To cover the capital shortfall caused by these liabilities, two of Zulu’s affiliates made three separate capital contributions to Zulu. One of these capital contributions was made on December 31,2014 and was considered a current asset. The other two capital contributions, which totaled $150,040, were not made until 2015, specifically on January 28 and February 4,2015. However, Zulu improperly reported these two capital contributions as current assets on its December 31,2014 unaudited statement.”
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The second count of the complaint is regarding failure to implement an AML (anti money laundering) program. The issue here is that Zulu relied on the forex brokers it was acting as IB for to handle its customer identification requirements. The problem is that two of these brokers were not regulated in the US and therefore did not fall under the jurisdiction of the NFA which considers it unacceptable.
The third count of the complaint is regarding failure to adequately supervise the firm’s employees, agents and operations. Here the main issue is this: “As evidenced by the capital and AML deficiencies alleged in Counts I and ll, above, Zulu and Giochais failed to adequately supervise Zulu’s operations to ensure that Zulu was in capital compliance, and that the firm adequately reviewed customers’ accounts for compliance with CIP and NFA Bylaw 1101, and for suspicious activity.”
ZuluTrade and its CEO Leon Yohai Giochais were given 30 days to respond to the NFA complaint; failure to respond will be considered an admission of guilt.