CFTC Sues 11 Unregistered Forex Entities

While traders were busy making pips rain last September 8, the Commodity Futures Trading Commission (CFTC) announced that it filed enforcement actions against 11 forex-related firms across Federal District Courts in Illinois, New York, Utah, and Wyoming.

As you all know, the CFTC’s mission is to protect the public from abusive practices related to the sale of commodity and financial futures and options. Luckily for us, the CFTC has been enforcing stricter forex regulations since October 2010, when it required entities that wish to participate in the forex market to register with the CFTC.

The CFTC stepped up its game last January when it filed enforcement actions against 14 entities. Out of those 14 firms, 11 have already settled their charges or have defaulted, while 3 cases are still pending. This time around the CFTC is charging 11 forex-related companies. Is your broker one of them? Here’s the list:

1st Investment Management, LLC, a Wyoming LLC
City Credit Capital, (UK) Ltd., a United Kingdom company
Enfinium Pty Ltd., an Australian company
GBFX, LLC, a New York LLC
Gold & Bennett, LLC, a New York LLC
InterForex, Inc., a British Virgin Islands company
Lucid Financial, Inc., a Utah corporation
MF Financial, Ltd., a Belize company with offices in New York City
O.C.M. Online Capital Markets Limited, a British Virgin Islands company
Trading Point of Financial Instruments Ltd. a Cyprus company
Windsor Brokers, Ltd., a Cyprus company

According to the CFTC, 9 out of 11 of these firms acted as Retail Foreign Exchange Dealers (RFEDs). Remember, RFEDs and Futures Commission Merchants (FCMs) usually take the opposite side of a traders’ transaction. Under the Commodity Exchange Act (CEA) and CFTC Regulations, an entity acting as an RFED or FCM must register with the CFTC.

As for Gold & Bennett, LLC and Lucid Financial, Inc., the CFTC asserted that they placed forex trades at an RFED without declaring themselves as an “Introducing Broker.”

The CFTC is currently looking to file for preliminary injunctions against these brokers. For all you non-lawyers out there, an injunction will prevent a broker from carrying out its everyday operations (like the handling and processing of client trades) until the broker complies with the CEA and CFTC regulations.

In addition to the injunction, the CFTC will be filing for civil monetary payments, trading bans, disgorgement (giving back of profits obtained through illegal activities) and rescission (cancellation of contracts).

The bigger question for investors is, “What happens if my broker is on that list?”

While you won’t be thrown in jail for trading with any of the brokers listed above, it wouldn’t hurt to take caution with your transactions with them. After all, it is YOUR hard-earned money at stake and you wouldn’t want to go through any legal headaches should anything bad happen.

I suggest you contact your broker and ask them what they plan to do about the allegations. If you aren’t pleased or are iffy about your brokers’ response, then it might be time explore your options.

If you have any questions, you can also ask the CFTC itself for more information. Big Brother is there to help! Here’s a helpful link for any forex fraud inquiries:

  • Chris Zacharia

    Official Response from Trading Point of
    Financial Instruments Ltd.

    Trading Point of Financial instruments is
    aware of the September 8th complaint by CFTC for failure to register
    according to the new legislation. 

    The complaint has yet to be officially served
    to Trading Point, however the management and legal team of the company are
    fully aware of the issue and will be in communication with the CFTC staff to
    speedily resolve the matter.  

    Trading Point of Financial Instruments is a
    European regulated company licensed by CYSEC and in strict compliance with the
    Markets in Financial Instruments Directive 2004/39/EC (known as
    “MiFID”). MIFID is the European Union law that provides harmonized
    regulation for investment firms across the 30 member states of the European
    Economic Area. 

    The main objectives of the Directive are to increase competition
    and consumer protection in investment service. 
    The key aspects of MiFID are to ensure amongst others: Authorization,
    regulation and pass-porting, client categorization, client order handling,
    pre-trade transparency, post-trade transparency, best execution and Systematic

    MIFID consumer protection regulation is by
    no means inferior to any non EU equivalent. Moreover the EU directive respects
    the rights of any responsible trader to trade under the conditions he chooses
    as long as the substantial risks of financial loss are clearly made known to

    Trading Point prides itself on its
    reputation for having the client’s best interests as its cornerstone. The
    company respects and does its best to be in line with the laws of every

    Finally we want to reassure everyone that
    the complaint of CFTC for failure to register will be resolved and it does not
    in any way affect the everyday operations of the company.


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