FXCM Ordered to Pay More Than $843,000 Over Revelation Forex
- FXCM failed to identify or report warning signs in violation of its own compliance procedures
On Tuesday, the U.S. Commodity Futures Trading Commission (CFTC CFTC The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss Read this Term) simultaneously filed and settled charges against Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term Capital Markets (NYSE: FXCM) for failing to diligently supervise its employees’ handling of accounts held by Revelation Forex Fund. The fraudulent foreign currency exchange pool, Revelation Forex Fund, was operated by Kevin G. White and two legal entities that he controlled.
According to the CFTC, FXCM failed to follow its compliance procedures that require that it “know all of its customers” and that its employees identify and promptly report suspicious activities to the appropriate authorities.
In July 2013, the CFTC sued White and his entities for their fraudulent scheme and subsequently entered into a consent order for permanent injunction against them. In December of that year he pled guilty to numerous charges of fraud, including the embezzlement of approximately $1.8 million of client funds. White was sentenced to over eight years in prison for mail fraud.
Although FXCM was aware of warning signs that Revelation Forex was a fraud, FXCM failed to identify or report these warning signs in violation of its own compliance procedures. Additionally, it failed to report that White’s operation of websites on behalf of the entities violated their exemption from registering as a commodity pool operator. The CFTC also finds that FXCM failed to respond fully to its document request and, in doing so, violated a previous commission order.
The CFTC requires FXCM to pay a civil monetary penalty of $700,000, disgorge commissions and fees of $143,922.50 that it earned from the Revelation Forex accounts (which attracted nearly $7.4 million in investments), and comply with certain undertakings. These include hiring a third-party compliance consultant to review and report on the supervisory issues.
On Tuesday, the U.S. Commodity Futures Trading Commission (CFTC CFTC The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss Read this Term) simultaneously filed and settled charges against Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term Capital Markets (NYSE: FXCM) for failing to diligently supervise its employees’ handling of accounts held by Revelation Forex Fund. The fraudulent foreign currency exchange pool, Revelation Forex Fund, was operated by Kevin G. White and two legal entities that he controlled.
According to the CFTC, FXCM failed to follow its compliance procedures that require that it “know all of its customers” and that its employees identify and promptly report suspicious activities to the appropriate authorities.
In July 2013, the CFTC sued White and his entities for their fraudulent scheme and subsequently entered into a consent order for permanent injunction against them. In December of that year he pled guilty to numerous charges of fraud, including the embezzlement of approximately $1.8 million of client funds. White was sentenced to over eight years in prison for mail fraud.
Although FXCM was aware of warning signs that Revelation Forex was a fraud, FXCM failed to identify or report these warning signs in violation of its own compliance procedures. Additionally, it failed to report that White’s operation of websites on behalf of the entities violated their exemption from registering as a commodity pool operator. The CFTC also finds that FXCM failed to respond fully to its document request and, in doing so, violated a previous commission order.
The CFTC requires FXCM to pay a civil monetary penalty of $700,000, disgorge commissions and fees of $143,922.50 that it earned from the Revelation Forex accounts (which attracted nearly $7.4 million in investments), and comply with certain undertakings. These include hiring a third-party compliance consultant to review and report on the supervisory issues.