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Estonian FX broker Tallinex ordered to pay back $10 mln. to US citizens

Jul 20 2018
By
Jonathan Smith

A US Court has ordered  Tallinex Ltd., an Estonian company, licensed  in St. Vincent and the Grenadines to pay 10,289,391 USD in restitution to U.S. Customers, as well as a  681,888 USD civil penalty, the U.S. Commodity Futures Trading Commission (CFTC) says. 

 

The U.S. District Court for the District of Utah also ruled against General Trader Fulfillment (GTF), a Nevada company operating in Utah, that introduced U.S. customers to Tallinex. GTF will have to pay a 85,000 USD civil penalty.

 

The Court found that Tallinex operated as a forex broker without a license by “soliciting or accepting orders for leveraged or margined forex transactions from retail U.S. customers, and offered to be or was the counterparty to such contracts with its customers” without being registered with the CFTC as a retail forex dealer. 

 

The Court also found that Tallinex defrauded US citizens “by knowingly or recklessly misrepresenting or omitting material facts”, falsely claiming to be lawfully doing business in the United States and that customer funds were segregated and protected in the event of Tallinex’s financial collapse. 

 

Another finding of the Court is that the broker failed to disclose risks and promoted extraordinary profits of between 162.29% and 1301.10% to create the impression that forex investments made with Tallinex were likely to be extremely profitable, in an effort to increase its customer base.

 

As for GTF, which was in the business of providing forex trade coaching, the Court found they actually acted as an introducing broker to Tallinex without being registered with the CFTC, as required. According to the ruling, at last one GTF coach  introduced U.S. customers, who are not eligible contract participants, to Tallinex.

 

All forex brokers in the US should be licensed by the National Futures Association (NFA), which has very tough fiscal requirements for its members, including a minimum operational capital requirement in the amount of 20 mln.USD. Only NFA regulated brokers can offer forex and CFD trade to US citizens.

 

CFTC thanks the Estonian Financial Supervision Authority, the St. Vincent and the Grenadines Financial Services Authority, the Bulgarian Financial Supervision Commission, and the Czech National Bank for their assistance in the investigation.

TAGS: Tallinex  US Court  forex borker  NFA  scam  GTF 
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