UK firm pleads guilty in major forex fraud case

Jay Hawk

A Britain-based broker and its US sister company have submitted guilty pleas in a securities fraud case involving falsified foreign exchange trades.

TFS-ICAP Ltd in the UK and TFS-ICAP LLC in the US both said that they had inserted false trades into their forex options set-up for emerging markets around the world.

According to those prosecuting the case, the firms’ crimes stretch back to January 1st, 2007 and continued until as recently as December 31st, 2015.

Using technological communication methods, the firms’ brokers would tell traders based in the US that a host of new trades had been placed in forex options markets in Latin America.

This created the illusion that the markets were more liquid than they actually were. However, the trades were in fact, fake, leading traders to be misled.

The investigation focused in part on the involvement of managers and other senior leaders at the firms. It is believed that these individuals were fully aware of the fraud and permitted its continuation.

The office of the New York state Attorney General, Barbara Underwood, investigated the case.

Over the course of three years, the office read and listened to written and voice-based messages between staff members and out to bank traders stretching back two years.

As part of the complex and tech-focused investigation, it also looked at the firms’ internal emails. Trade blotters, which record information on trades placed, were also scrutinised.

According to court documents, the firms faced New York City Criminal Court Administrative Judge Kevin McGrath.

During this hearing, the firms admitted to a single count of securities fraud contravening the Martin Act, which is a New York state law giving the local government the power to vigorously pursue securities fraud cases.

In the end, the firms agreed to a civil settlement with the Attorney General.

A comprehensive range of punishments have now been levied on the companies as part of this process. They will need to pay the sum of $1.15 million US dollars in penalties, and they will also have to change their policies.

They will be required to revise their procedures to ensure increased openness around bids and offers. For the next 24 months, the firms will have to let an independent oversight provider check their activities.

In addition, two senior members of staff on the anti-fraud team will need to be dismissed.

Aside from these punishments, individuals at the firms will now also face a separate criminal investigation. It is understood that the Attorney General is looking at both a group of brokers and members of the senior management teams

As part of this round of punishments, the two firms have agreed to help with this investigation.

In a statement, Underwood said that her team would always ensure it came down heavily on perpetrators of fraud.

“My office will pursue financial frauds – no matter how sophisticated – and hold financial institutions accountable for their conduct,” she said.

“Our investigation into fraudulent conduct in the foreign exchange currency options market continues.”


Jay Hawk

Latest news

Is This a Dip to Buy or the Start of a Market Correction?
The surprising change in tone by the US Federal Reserve last Wednesday has been followed by a very slow-motion, minor market correction. Read more
EURJPY – Bears might be coming out of hiding
The EURJPY currency pair on the D1 time frame was in a prolonged uptrend until the 1st of June when a higher top was recorded at 134. Read more

Safest Forest Brokers 2020

Broker Info Best In Customer Satisfaction Score
#1 ForexTime LogoYour capital is at risk Founded: 2011 Global CFD & FX Broker
Number One Broker
BEST FOREX BROKER Visit broker
5
#2 ForexTB logoYour capital is at risk Founded: 2015 Global Forex & CFD Broker
Number One Broker
LOWEST FEES Visit broker
4.9
#3 Tickmill forex broker logoYour capital is at risk Founded: 2014 Global Forex & CFD Broker
Number One Broker
Best Trading Conditions Visit broker
4.9
#4 BlackBull MarketsYour capital is at risk Founded: 2014 Global Forex Broker
Number One Broker
BEST SPREADS Visit broker
4.8
#5 Forex Broker Pepperstone LogoCFDs and FX are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Founded: 2010 Global Forex Broker
Number One Broker
Low minimum deposit Visit broker
4.9

    Forex Fraud Certified Brokers

    XM Logo
    HYCM Logo
    ATFX Logo
    Vantage FX logo
    Pepperstone
    IQ Option Logo
    FXTM Logo
    IC Markets Logo
    LegacyFX Small Logo
    Plus500 Small Logo
    OctaFX Logo
    Forex.com Logo
    skilling logo
    BlackBull Markets Small Logo
    City Index Logo