Similar to FXOpen which settled similar case in January 2012 and unlike InstaTrade and ZTrade who didn’t settle but were penalized, InterForex settled the case with CFTC for accepting US forex traders. InterForex through its lawyer Felix Shipkevich entered into a consent order and was handed a permanent injunction by the CFTC. InterForex is the first firm from the second CFTC’s ‘sweep’ against foreign forex brokers accepting US clients.
Although CFTC doesn’t really have any authority against foreign companies settlement in such case is an interest of both parties as CFTC can’t actually reach them in any other way and the sued brokers would like to put this matter behind them for various reasons. Such reasons can be the interest of owners and directors to travel in the US or if the firm is undergoing regulatory proceedings in another jurisdiction and would like to present a clean sheet to the regulator.
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court consent order that permanently bars defendant InterForex, Inc., of Tortola, British Virgin Islands, from soliciting or accepting orders to trade foreign currency (forex) from U.S. customers who are not Eligible Contract Participants (ECPs). The order also permanently bars InterForex from offering to be the counterparty to U.S. customers’ forex transactions, without registering with the CFTC.
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The order, entered on February 2, 2012, by Judge Rebecca R. Pallmeyer of the U.S. District Court for the Northern District of Illinois, also requires InterForex to prominently display a notice on its website that InterForex does not provide services for U.S. customers.
The order settles CFTC charges that InterForex unlawfully solicited U.S. customers to engage in 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).
Specifically, the order finds that between October 18, 2010, and September 8, 2011, InterForex solicited orders from U.S. customers who were not ECPs to open leveraged forex trading accounts through its website. During the period, InterForex’s website did not impede U.S. residents from applying for forex accounts; however, InterForex did not accept orders from any U.S. customers, according to the order. The order finds that InterForex acted as an RFED by offering to take the opposite side of retail customers’ forex transactions (i.e., offered to act as a counterparty) without being registered as an RFED and also solicited U.S. customers to open a variety of forex trading accounts without being registered, in violation of the Commodity Exchange Act (CEA) and applicable CFTC regulations.