Several forex firms targeted in big crackdown by US regulator

Chris Lee

A major US regulatory body has imposed over one million US dollars in fines on a range of companies – including several foreign exchange providers.

Eight different firms were found to have been offering financial products without the correct permissions.

Some of these products included foreign exchange instruments. Others included binary options, a notorious product which is considered largely unsuitable by the wider industry.

The fines were delivered by the Commodity Futures Trading Commission, or CFTC, which regulates the options and futures industries in the USA.

The firms hit by the fines included Allen Investment Management LLC, Hooley Solutions LLC, LegionFX LLC and HedgeFund4U LLC. The other four firms included were Forex Entourage LLC, Wealth Generators LLC, The Lion’s Share FX and International Markets Live, Inc.

The CFTC’s statement did not provide specific information on levels of fines. However, industry media has reported that the total amount has exceeded $1.2 million US dollars. This news comes after it was revealed that the CFTC has paid millions of dollars to whistle-blowers in the industry who were willing to reveal information about wrongdoing.

This scheme has been in place for eight years, and in some cases, it can lead to individuals receiving up to 30% of any punishment proceeds.

It was not immediately clear whether or not whistle-blowers were involved in these most recent cases.

In a statement, the CFTC’s Director of Enforcement said that the move showed the body’s commitment to pushing firms to meet their legal obligations.

“We have seen an increase in the number of unregistered entities and individuals illegally pedalling apps, websites, and social media to retail customers for trading in forex and binary options,” said James McDonald.

“Many of these entities and individuals specifically target Millennials, who may be less experienced investors.”

McDonald used the opportunity to point out why the CFTC’s rules exist.

“When customers deal with CFTC-registered entities, they can have confidence that certain required safeguards are in place to protect them from fraud and other abusive practices,” he said.

“Customers can have no such confidence when dealing with unregistered entities. That is one reason why the law requires individuals and entities offering products in our markets to register with the CFTC.”

In closing, McDonald said that his organisation would continue to insist on high standards across the board.

“And that’s why the CFTC will vigorously pursue entities and individuals who fail to register with the CFTC when required and put in place the necessary safeguards needed to protect customers and preserve market integrity,” he added.

The CFTC regularly encourages interested parties to check that the providers they plan to use are legitimate.

“The CFTC strongly urges the public to check whether a company is registered before investing funds. If a company is not registered, an investor should be wary of providing funds to that company,” it said.

It pointed investors in the direction of the US government’s Smart Check website.

Individuals can also call a toll-free phone number, 866-FON-CFTC (866-366-2382), to report any suspected violations.


Chris Lee

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