The US Commodity Futures Trading Commission (CFTC) has announced that Judge James B. Zagel of the US District Court for the Northern District of Illinois issued a Consent Order of Permanent Injunction that bars Australian firm Halifax Investment Services from soliciting orders to trade foreign currency (forex) from United States residents who do not qualify as eligible contract participants (ECPs) and from offering to be the counterparty to United States residents’ forex transactions without registering with the CFTC.
The Order requires Halifax to publish a notice on its website stating that Halifax does not provide services for United States residents. The Order settles CFTC charges that Halifax unlawfully solicited members of the public to engage in forex transactions and operated as a Retail Foreign Exchange Dealer (RFED) without being registered with the CFTC.
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Specifically, the Order states that between October 18, 2010 and February 5, 2013, Halifax maintained a website that permitted United States residents who were not eligible contract participants to potentially apply to open leveraged forex trading accounts by submitting information online to Halifax’s website.
In the forex market, entities known as RFEDs or Futures Commission Merchants (FCMs) may buy forex contracts from, or sell forex contracts to, individual investors.
Under the Commodity Exchange Act and CFTC regulations, an entity acting as an RFED or FCM must register with the CFTC and abide by rules and regulations designed for investor protection, including those relating to minimum capital requirements, recordkeeping, and compliance.
Further, with a few exceptions, such an entity also must be registered with the CFTC if it solicits or accepts orders from U.S. investors in connection with forex transactions conducted at an RFED or FCM. (See the CFTC’s Forex Currency Trading page.)
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By GlobalDataThe CFTC strongly urges the public to check with the National Futures Association 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. A company’s registration status can be found at: www.nfa.futures.org/basicnet.
The CFTC Division of Enforcement staff members responsible for this action are David Terrell, Elizabeth Streit, Joy McCormack, Scott Williamson, Rosemary Hollinger, and Rick Glaser.
