A few days ago, I wrote about the National Futures Association (NFA) stepping up its game when it comes to sniffing out unfair trading practices. This week, let’s look at how the U.S. Commodity Futures Trading Commission (CFTC) is doing its part in protecting traders like you and me.
Luckily for us, regulatory agencies are there to prevent fraudulent behavior or help us if we get scammed and cheated out of our hard earned money. In light of the recent financial crisis, government agencies have stepped up their efforts towards establishing regulations that require firms to register with the CFTC.
Just recently, the CFTC, a regulatory agency that serves as a watchdog against scammers and fraudulent brokers, filed enforcement actions against 14 forex firms that were operating without being registered. Better make sure you’re not forking over your hard-earned cash to these forex companies which were sued by CFTC:
1. EuroForex Development LLC, a Delaware LLC
2. FIG Solutions Limited, Inc., a Delaware corporation
3. ForInvest, a Delaware corporation
4. FXOpen Investments Inc., a foreign entity with various business operations located throughout the United States
5. FXPRICE, a Delaware LLC
6. GIGFX, LLC., a Delaware company
7. InovaTrade, Inc., a company with purported offices in Florida
8. InstaTrade Corporation d/b/a InstaForex, a British Virgin Islands company
9. InvesttechFX Technologies, Inc., a Canadian corporation located in Toronto
10. J&K Futures, Inc., a company with purported offices in California and New York
11. Kingdom Forex Trading and Futures, Ltd., a Nevada company
12. Prime Forex, LLC, a Delaware LLC
13. Wall Street Brokers, LLC, a Delaware LLC
14. ZtradeFX LLC, a Connecticut LLC.
According to the CFTC press release, two of these firms, Ztrade FX LLC and FXPRICE, allegedly acted as an unregistered introducing broker by soliciting customers to trade with brokers. The rest of the twelve firms acted as retail foreign exchange dealers (RFED) or Futures Commission Merchants (FCM) without registering with the CFTC.
This recent crackdown was the first use of the 2008 Farm Bill and the Dodd-Frank Act (and no, the Farm Bill isn’t a bill towards the regulation of trading crops on Farmville). Under the new legislations, forex exchange dealers or brokers are required to register with the CFTC in order to offer their services to the public. Furthermore, under CFTC regulations, members must abide by all the rules set forth by the CFTC, which are designed to for any investor’s own protection. That means you!
Well, the advantages of trading with a registered forex broker should be obvious. Regulation helps ensure that you get the best product and service available and that the broker is acting fairly. Remember a couple weeks ago when I talked about a certain platform that had a plug-in that benefitted the broker? That wouldn’t have been spotted without the intervention of government regulation!
Of course, the CFTC and the NFA will also need YOUR help to do their job easier and better. For one, you could check out the CFTC’s case status reports to see if your broker is among the companies with charges against them, or if they are registered at all. This way you’ll be able to cut your losses quickly, or prevent yourself and your friends from being conned by those savvy, freebie-giving “brokers”.
Also, if you happen to witness a violation and decide to report it, you can check out their site where you can file a complaint to the CFTC’s Office of Proceedings (clearly creativity is not their specialty). In fact, they even provide other services so you can call or e-mail them if you’re having trouble tracking or proceeding with your case. With all these aids that the CFTC is providing, you have no excuse for being an ill-informed or irresponsible trader!
That’s it for my expose this week! Tune in again next week as I unveil more industry tricks and other information that might help you find your way around the forex jungle. In the meantime you can meet up with other traders on the best forex trading community, or check out our Twitter and Facebook accounts for more updates.