Federal regulators have filed suit against 14 small firms that officials say are breaking the law by selling foreign-currency contracts to individuals without being registered with a government agency.
The lawsuits announced Wednesday were the first show of force by the Commodity Futures Trading Commission under new regulations that took effect in October under the financial overhaul law. The lawsuits seek to force the firms to register with the CFTC before they can continue to operate. They also seek civil fines and restitution.
When an investor buys a foreign-currency contract, he buys the right to purchase an amount of foreign currency at a fixed price in dollars. Investors hope to profit from ups and downs in currency markets, but they can also suffer losses from sharp price swings.
The CFTC urged the public Wednesday to check whether a firm is registered before investing money. If the firm isn't registered, people should be wary of investing with it, the agency said.
The CFTC and state regulators have previously warned the public to be cautious before trading foreign currencies in general -- especially outside of major exchanges such as the Chicago Mercantile Exchange -- saying it can be very risky.
The lawsuits announced Wednesday were filed in federal courts in Chicago, New York, Kansas City and Washington, D.C. The firms named were:
The following companies were sued by the CFTC as part of this sweep:
EuroForex Development LLC, a Delaware LLC;
FIG Solutions Limited, Inc., a Delaware corporation;
ForInvest, a Delaware corporation;
FXOpen Investments Inc., a Delaware LLC;
FXPRICE, a Delaware LLC;
GIGFX, L.L.C., a Delaware company;
InovaTrade, Inc., a company with purported offices in Florida;
InstaTrade Corporation d/b/a InstaForex, a British Virgin Islands company;
InvesttechFX Technologies, Inc., a Canadian corporation located in Toronto;
J&K Futures, Inc., a company with purported offices in California and New York;
Kingdom Forex Trading and Futures, Ltd., a Nevada company;
Prime Forex, LLC, a Delaware LLC;
Wall Street Brokers, LLC, a Delaware LLC; and
ZtradeFX LLC, a Connecticut LLC.
In the forex market, entities known as Retail Foreign Exchange Dealers (RFED) or Futures Commission Merchants (FCM) may buy foreign currency contracts from or sell foreign currency contracts to individual investors. Under the Commodity Exchange Act (CEA) and CFTC Regulations, an entity acting as an RFED or FCM must register with the Commission and abide by rules and regulations designed for investor protection, including those relating to minimum capital requirements, recordkeeping and compliance. Further, with a few exceptions, such an entity also must be registered with the Commission if it solicits or accepts orders from US investors in connection with forex transactions conducted at an RFED or FCM.
In all but two of the complaints, the CFTC alleges that a defendant acted as an RFED; that is, it offered to take or took the opposite side of a customer’s forex transaction without being registered. In the remaining two complaints, ZtradeFX LLC and FXPRICE, the CFTC alleges that the defendant solicited customers to place forex trades at an RFED without being registered as an Introducing Broker. In every complaint, the CFTC alleges that the defendant solicited or accepted orders from US investors to enter into forex transactions in violation of the Act. The CFTC has moved for preliminary injunctions preventing these defendants from operating unless and until they comply with the CEA and Commission Regulations. The CFTC’s complaints also seek civil monetary penalties, trading and registration bans, disgorgement and rescission.
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The lawsuits announced Wednesday were the first show of force by the Commodity Futures Trading Commission under new regulations that took effect in October under the financial overhaul law. The lawsuits seek to force the firms to register with the CFTC before they can continue to operate. They also seek civil fines and restitution.
When an investor buys a foreign-currency contract, he buys the right to purchase an amount of foreign currency at a fixed price in dollars. Investors hope to profit from ups and downs in currency markets, but they can also suffer losses from sharp price swings.
The CFTC urged the public Wednesday to check whether a firm is registered before investing money. If the firm isn't registered, people should be wary of investing with it, the agency said.
The CFTC and state regulators have previously warned the public to be cautious before trading foreign currencies in general -- especially outside of major exchanges such as the Chicago Mercantile Exchange -- saying it can be very risky.
The lawsuits announced Wednesday were filed in federal courts in Chicago, New York, Kansas City and Washington, D.C. The firms named were:
The following companies were sued by the CFTC as part of this sweep:
EuroForex Development LLC, a Delaware LLC;
FIG Solutions Limited, Inc., a Delaware corporation;
ForInvest, a Delaware corporation;
FXOpen Investments Inc., a Delaware LLC;
FXPRICE, a Delaware LLC;
GIGFX, L.L.C., a Delaware company;
InovaTrade, Inc., a company with purported offices in Florida;
InstaTrade Corporation d/b/a InstaForex, a British Virgin Islands company;
InvesttechFX Technologies, Inc., a Canadian corporation located in Toronto;
J&K Futures, Inc., a company with purported offices in California and New York;
Kingdom Forex Trading and Futures, Ltd., a Nevada company;
Prime Forex, LLC, a Delaware LLC;
Wall Street Brokers, LLC, a Delaware LLC; and
ZtradeFX LLC, a Connecticut LLC.
In the forex market, entities known as Retail Foreign Exchange Dealers (RFED) or Futures Commission Merchants (FCM) may buy foreign currency contracts from or sell foreign currency contracts to individual investors. Under the Commodity Exchange Act (CEA) and CFTC Regulations, an entity acting as an RFED or FCM must register with the Commission and abide by rules and regulations designed for investor protection, including those relating to minimum capital requirements, recordkeeping and compliance. Further, with a few exceptions, such an entity also must be registered with the Commission if it solicits or accepts orders from US investors in connection with forex transactions conducted at an RFED or FCM.
In all but two of the complaints, the CFTC alleges that a defendant acted as an RFED; that is, it offered to take or took the opposite side of a customer’s forex transaction without being registered. In the remaining two complaints, ZtradeFX LLC and FXPRICE, the CFTC alleges that the defendant solicited customers to place forex trades at an RFED without being registered as an Introducing Broker. In every complaint, the CFTC alleges that the defendant solicited or accepted orders from US investors to enter into forex transactions in violation of the Act. The CFTC has moved for preliminary injunctions preventing these defendants from operating unless and until they comply with the CEA and Commission Regulations. The CFTC’s complaints also seek civil monetary penalties, trading and registration bans, disgorgement and rescission.
http://finance.yahoo.com/news
Make Money With Forex Trading - How to Research and More.
How the Price of Oil Affects Forex Trading