 have been banned from operating in the U.S by the Commodity Futures Trading Commission (CFTC).){kind=link}
Forex Capital Markets (FXCM) (NASDAQ:FXCM) have been permanently banned from operating in the U.S by the Commodity Futures Trading Commission (CFTC), after it was found that the company consistently took positions against its clients.
The CFTC rules to prevent FXCM paying a $7 million settlement to levy charges for misleading customers and covering its relationship with a leading market-maker. The broker, which deals primarily with foreign-exchange markets, had initially been dealt with the penalty fine relating to forex fraud practices.
The CFTC Order concluded that between the period September 4 2009 through to 2014, FXCM concealed the conflict of interest from costumers by its “No Dealing Desk”. The Order finds FXCM and its holdings are culpable of making false statements to the National Futures Association (NFA) about its relationship with the market maker. Forex Capital Markets and its founding entities Niv, and Ahdout have been ultimately permanently prohibited from operation in the U.S. Amid the definitive news of the CFTC ruling, the company shares lost over 50 percent of their value.
Gretchen L. Lowe, Principal Deputy Director and Chief Counsel of the CFTC’s Enforcement division said in a statement:
“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. Today’s action’s demonstrates that the CFTC is committed to protecting customers from harm in the markets it regulates.”
Following the blow to FXCM’s US operations, GAIN Capital (NYSE:GCAP) announced that it had signed an agreement with the foreign exchange broker to acquire its extensive US client base.
Commenting on the deal, the CEO of GAIN Capital, Glenn Stevens, said: “We are excited to welcome customers of FXCM’s U.S. operations to our award-winning FOREX.com service.”
FXCM is currently ranked as the largest Retail Foreign Exchange Dealer (RFED) in the US, with a projected market share of approximately 34.0 percent as of December 2016. In the hours prior the ruling on Monday, shares in FXCM plunged to a year low of $6.65.
The stock tumbled 50 percent to $3.45 during Tuesday trading, marking the biggest decliner on the Nasdaq exchange market.