US Court Slaps $7 Million Fine on TFS-ICAP for Misleading Clients

The former CEO and emerging markets desk head were penalized with $500,000 each.

A New York district court has slapped a heavy fine of $7 million on the two entities of forex options broker TFS-ICAP, one in New York and the other in London, for major market misconduct and deceiving clients.

The US Commodity Futures Trading Commission (CFTC) dragged TFS-ICAP LLC and TFS-ICAP Ltd to the District Court for the Southern District of New York and was fighting the legal battle for a long time.

The judgment came as the interdealer broker already admitted the involvement of its employees in the misconducts, popularly known as ‘flying prices’ and ‘printing trades’.

The CFTC detailed that, between January 2014 and August 2015, TFS-ICAP represented to its US bank clients with bids or offers for an FX option at a particular level, but in reality, no other counterparties bid or offered options at that level. Both the New York and London entities of the interdealer broker further falsely communicated to clients that traders were executed on their behalf.

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Failure of Leadership

Apart from the companies, the court held TFS-ICAP former CEO, Ian Dibb and its former Emerging Markets desks head, Jeremy Woolfenden accountable for their failure in supervision. Both of them were fined $500,000 each and agreed to forfeit their CFTC registrations.

“Brokers and other intermediaries play a critical role in our markets. The CFTC will act to ensure that these entities communicate and report honest and accurate pricing information to protect the integrity of the markets,” Vince McGonagle, CFTC’s acting Enforcement Director, said.

“We are also committed to holding corporate managers who have regulatory supervisory responsibilities accountable to ensure policies and procedures are in place that would have prohibited and could have deterred, unlawful conduct from occurring.”

To prosecute TFS-ICAP, the CFTC worked with the UK’s Financial Conduct Authority (FCA). Furthermore, the London regulator fined the interdealer broker £3.44 million last month for market misconduct.

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