NFA Levies $700K Fine Against PFG

NFA

February 8, Chicago - National Futures Association (NFA) has levied a fine of $700,000 against Peregrine Financial Group, Inc. (Peregrine), a Futures Commission Merchant and Forex Dealer Member of NFA with headquarters in Cedar Falls, Iowa and Chicago, Illinois. Peregrine maintains branch offices in California, Florida, Illinois, Michigan and New York. The Decision, issued by NFA's Business Conduct Committee, is based on a Complaint filed in February 2012 and a settlement offer submitted by Peregrine, Russell R. Wasendorf, Jr., Peregrine's president, Susan O'Meara, Peregrine's director of compliance, and Nolan J. Schiff, Peregrine's director of managed foreign exchange. Peregrine, Wasendorf, O'Meara and Schiff neither admitted nor denied the allegations of the Complaint in making their settlement offer.

The Complaint alleged that Peregrine, Wasendorf, and O'Meara failed to supervise four of Peregrine's Guaranteed Introducing Brokers (GIBs): Clash Financial LLC (Clash, see previous press release), Oxford Trading Group, Inc. (OTG, see previous press release), California Capital Trading Group LLC (CCTG), and Patriot Financial Markets LLC. Complaints issued during 2010 and 2011 alleged that Clash, OTG and CCTG made trade recommendations that maximized commissions without regard for the best interests of their customers and that all four GIBs made deceptive sales solicitations. The Complaint also alleged that Peregrine, Wasendorf, O'Meara and Schiff failed to diligently supervise activities related to the firm's forex customers' accounts by failing to ensure the implementation of effective anti-money laundering (AML) procedures related to some of those accounts.

In addition to the $700,000 fine, the Respondents must retain an independent consultant to review Peregrine's existing procedures for supervising its GIBs and retail customer accounts and Peregrine is prohibited from entering into guarantee agreements with any IBs for a period of two years. Peregrine must also designate a full-time AML officer.

The complete text of the Complaint and Decision can be found on NFA's website.
 

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Posted on February 8, 2012 22:38 by Tom Herod
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NFA Takes Emergency Action Against IFINIX

IFINIX

August 18, Chicago - National Futures Association (NFA) announced today that it has taken an emergency enforcement action against IFINIX Futures Inc. (IFINIX). IFINIX is an Introducing Broker and Forex Firm Member of NFA, located in Plainview, New York. IFINIX also operates as Pro Active Futures, Inc.

NFA's investigation of the firm found that IFINIX's principal Benhope Munroe created fabricated bank statements in a deliberate attempt to deceive NFA regarding the firm's deficient capital position. The purported bank statements indicated that the firm's operating account had a current balance of more than $60,000. However, as discovered by NFA through its investigation, the firm's bank account actually had a negative balance. Therefore, IFINIX has failed to demonstrate that it is in capital compliance with NFA Financial Requirements.

Effective immediately, the Member Responsibility Action (MRA) suspends IFINIX from NFA membership until further notice. IFINIX and all futures commission merchants (FCMs) carrying customer accounts introduced by the firm are also required to provide copies of the MRA to their customers. In addition, IFINIX is prohibited from disbursing or transferring any funds over which it or any person acting on its behalf exercises control, without prior NFA approval.

The MRA will remain in effect until IFINIX has demonstrated that the firm is in complete compliance with all NFA Requirements. IFINIX may request a prompt hearing on this matter before NFA's Hearing Committee.

The complete text of the MRA can be found on NFA's website (www.nfa.futures.org).

 

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Posted on August 21, 2011 06:32 by Tom Herod
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NFA Fines FXCM $2,000,000

Drew Niv
Drew Niv, CEO of FXCM

August 12, Chicago - National Futures Association (NFA) has issued a Decision imposing a $2,000,000 monetary sanction against Forex Capital Markets LLC (FXCM) in settlement of a Complaint issued by NFA's Business Conduct Committee on August 12, 2011. The Complaint cited FXCM for retaining gains derived from asymmetrical positive price slippage; failing to adopt or carry out adequate procedures to ensure the efficient execution of all customer orders; failing to treat all customers equally when giving price adjustments; failing to adequately investigate suspicious activity in several customers' accounts; and - together with its principal Drew Niv - failing to supervise. FXCM is a Futures Commission Merchant, Retail Foreign Exchange Dealer, and Forex Dealer Member located in New York, New York.

In addition to the $2,000,000 monetary sanction, FXCM must credit the accounts of its customers the amount of asymmetrical positive slippage which its customers experienced on their trades from and after June 18, 2008 and provide verification to NFA of these credits. In the future, FXCM is prohibited from engaging in price slippage or margin liquidation practices, as described in the Complaint. FXCM must also enhance existing procedures to ensure efficient execution of customer orders and compliance with NFA's anti-money laundering requirements.

The complete text of the Complaint and Decision can be found on NFA's website (www.nfa.futures.org).
 

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Posted on August 14, 2011 19:09 by Tom Herod
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NFA Expands Its Jurisdiction Of Forex Regulation

NFA

NFA has proposed several changes to its Forex Requirements, including an amendment that will subject all NFA Members that engage in retail forex transactions, regardless of whether they are an otherwise regulated entity under the Commodity Exchange Act (CEA), to NFA's Forex Requirements. In addition, the proposed amendments require Members to comply with the same "know your customer" requirements for forex customers as are currently required for futures customers. The amendments are currently being reviewed by the Commodity Futures Trading Commission (CFTC).

"The regulation of retail forex continues to evolve and these amendments are a reflection of that evolution," said NFA's General Counsel Tom Sexton. "Most importantly, regulatory exemptions that NFA established several years ago now need to be eliminated in light of recent legislative changes."

Currently, NFA Bylaw 306 excludes certain entities from the definition of Forex Dealer Member (FDM), and NFA Compliance Rule 2-39 excludes these same entities that engage in soliciting or managing retail forex accounts from certain Forex Requirements. The list of excluded entities includes, in part, NFA Members that are otherwise regulated financial institutions, financial holding companies, insurance companies, broker-dealers that are members of the Financial Industry Regulatory Authority (FINRA) and material associated persons of broker-dealers (if the broker-dealer is a member of FINRA).

"NFA adopted these exclusions about a decade ago because we were reluctant to impose additional regulatory burdens on Members who were highly regulated in other industries and who offered retail forex as a limited portion of their business," said Sexton. "With the growth of retail forex trading, however, we are now concerned that these exclusions could lead to unintended regulatory gaps."

Specifically, NFA had concerns that an otherwise regulated entity that is not subject to any meaningful regulatory scheme could become an NFA Member for the primary - or sole purpose - of cloaking itself with a mantle of respectability for its forex activities. Because these entities are NFA Members, their customers or potential customers could mistakenly believe that NFA regulates their forex activities.

"By eliminating the exclusions, we will ensure that all NFA Members conducting retail forex business are subject to our Forex Requirements," said Sexton.

Another proposed amendment will require that the "know your customer" requirements set forth in Compliance Rule 2-30 be applied to Members engaged in forex activities. "We don't see any reason why Members and Associates should have a different obligation with respect to forex customers as opposed to futures customers," said Sexton.

The proposed amendments will also require FDMs registered as Retail Foreign Exchange Dealers to maintain an office in the continental United States, Alaska, Hawaii or Puerto Rico that is responsible for preparing and maintaining CFTC and NFA required financial records and reports and be under the supervision of a listed principal and registered associated person of the FDM who resides in that office. "These are the same requirements that FCMs are subject to," said Sexton.

A copy of the complete rule submission letter is available on NFA's website. 

 

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Posted on April 20, 2011 17:47 by Tom Herod
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This Week On Turtle Soup



Here is what happened on Turtle Soup the trading week from Sunday, February 27 through Friday, March 4, 2011.

Sunday, February 27, 2011Trade Interceptor: Multi-Broker Forex App - Trade Interceptor unveiled its new multi-platform app supported by FXCM, GFT, ACM, FX Solutions, and MB Trading.

State Street Forex Probe Expands - We continue to follow the State Street saga. I guess $11.7 million in penalties wasn't enough for CFTC.

 

Monday, February 28, 2011Forex Scam Goes Small Potatoes - David & Loredana Ortiz thought they got away with $232,000 of investors' money. CFTC thought not.

 

Tuesday, March 1, 2011Who's Who in Forex: Masaaki Shirakawa - Japan's Governor of the Bank of Japan was tabbed the world's 6th most powerful by Newsweek.

FxPM Opens Miami Office - World Currency Trading opens a new Forex trading facility in Miami.

NFA Hires Edward Dasso For Surveillance - His official title is VP of Market Regulation but his official job is to oversee the surveillance of swap execution facilities (SEF).

Wednesday, March 2, 2011FOREX.com Goes Commercial - Now that they've gone public, GAIN Capital is stepping up its pursuit of retail Forex traders with prime time commercials. I have to admit -- it is a cute commercial.

 

Thursday, March 3, 2011FXall Opens Mumbai Office - FXall expands into one of the world's fastest growing Forex markets.

Who's Who in Forex: Ben Bernanke - We finally got around to Big Ben in our Who's Who in Forex series.

 

Friday, March 4, 2011NFA Bars CD Capital Management - As active as NFA and CFTC have been lately, I just can't figure out why firms don't pay more attention to how they run their businesses.

Forex, You & Taxes - Bob Green dispenses great advice on what you need to know about accounting for your Forex gains/losses when the IRS comes knocking.

 

So, the end of another trading week. Hope to see you again next week.

 

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Posted on March 4, 2011 11:45 by Tom Herod
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