FXCM to pay $650,000 CFTC fine over capital shortfall (updated)

Global Brokerage

13/02/2017 21:13

(Adds FXCM statement, paragraph 5) 
    NEW YORK, Feb 13 (Reuters) - FXCM Inc  FXCM.O  agreed to pay 
a $650,000 civil fine to settle U.S. Commodity Futures Trading 
Commission charges that the currencies broker was 
undercapitalized in January 2015 and was too slow to report the 
shortfall. 
    A consent order describing the settlement was filed on 
Monday with the federal court in Manhattan and approved by U.S. 
District Judge Katherine Forrest. 
    The settlement also resolved a claim that FXCM violated CFTC 
rules by representing to customers that it would limit their 
losses, through a policy of "zeroing out" negative balances. 
    FXCM did not admit or deny wrongdoing. 
    In a statement, FXCM said the settlement "brings to a close 
all material U.S. regulatory matters" affecting its U.S. unit, 
Forex Capital Markets LLC.     
    The settlement was disclosed one week after New York-based 
FXCM said it intended to pull out of U.S. retail foreign 
exchange, and sell its customer accounts to Gain Capital 
Holdings Inc  GCAP.N . 
    That announcement accompanied a $7 million CFTC fine against 
FXCM and founding partners Dror "Drew" Niv and William Ahdout to 
resolve charges that over five years they concealed FXCM's close 
ties to a market maker that received favored treatment. 
    FXCM, Niv and Ahdout were also barred from markets overseen 
by the CFTC. (http://www.cftc.gov/PressRoom/PressReleases/pr7528-17) 
    Monday's settlement stemmed from the Swiss National Bank's 
decision on Jan. 15, 2015 to eliminate a cap on the Swiss 
franc's value relative to the euro  EURCHF= . 
    That decision caused the euro to plunge, and led FXCM a day 
later to report having lost more than $200 million as a result. 
 
 (Reporting by Jonathan Stempel in New York; Editing by Alan 
Crosby and Phil Berlowitz) 
 ((jon.stempel@thomsonreuters.com; +1 646 223 6317; Reuters 
Messaging: jon.stempel.thomsonreuters.com@reuters.net)) 
 
Keywords: FXCM CFTC/SETTLEMENT