FXCM Removed By CFTC And Fined $7 Million

On Monday, the Commodity Futures Trading Commission (CFTC) announced sanctions against FXCM Inc FXCM regarding the brokerage's conflict of interests.

The agency found that between September 2009 through at least 2014, FXCM "engaged in false and misleading solicitations of FXCM’s retail foreign exchange (forex) customers by concealing its relationship with its most important market maker." Essentially, they were taking positions opposite their retail customers.

As a result the CFTC has fined FXCM $7 million, and required the company to withdraw their CFTC registration. 

What happens next?

The CFTC also announced that FXCM made false statements to the National Futures Association. Because of the CFTC’s findings, FXCM will be withdrawing from business in the US. They have signed a non-binding letter of intent with GAIN Capital Holdings for GAIN to purchase FXCM’s US customer accounts. The transaction is subject to regulatory approval. There will be no changes to FXCM customers outside of the United States.

“Full and truthful disclosure to customers and honest discourse with self-regulatory organizations such as NFA are vital to the integrity and oversight of our markets,” said Gretchen L. Lowe, Principal Deputy Director and Chief Counsel of the CFTC’s Division of Enforcement in a press release.

Withdrawing from this business will free approximately $52 million in capital. Proceeds from the account sale and the release of capital will go toward repaying FXCM’s loan from Leucadia National Corporation, which is also part of the FXCM Group.

For the interim period, FXCM will continue to service its US customers. 

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