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NFA Takes Emergency Enforcement Action Against FXDD

Dec 10 2012
Earlier this year the US forex broker FXDD found itself under scrutiny by one its two regulators - the National Futures Association (NFA). The NFA accused the broker of breaking the regulatory body’s on a number of different plains, including bookkeeping, anti-money laundering procedures, and asymmetrical slippage. 
The accusations resulted in an audit, which concluded with a 27-page report that showed some disturbing findings about the broker’s operations. According to NFA’s investigation, FXDD showed some serious deficiencies in record keeping, it failed to educate and train its staff in anti-money laundering procedures and exercised slippage practices that harmed its customers
And that wasn’t all. FXDD seized over $280,000 from nine customers, claiming that they were trading off the market. When the traders stroke back, the broker pressed legal charges against them but failed to produce evidence of market abuse, therefore the NFA instructed the broker to return the seized money to the customers (the civil suit is still in process and unfortunately we don’t have any further information on the legal proceedings). 
While the battle between FXDD and the nine traders is yet to be decided, the NFA is taking measures on the rest of the accusations against the broker. On Friday, December 7, 2012, the regulator issued an emergency enforcement action against FXDD. The broker is now required to either post a bond, or place money in an escrow account to make sure that it can meet its obligations under any order, which might result out of a related disciplinary action issued by the NFA on the price slippage accusations against the company. If these are found to be justified, FXDD will be penalized with a customer restitution of $3.3 million - approximately 12% of the broker’s adjusted net capital (as per data from the CFTC)
NFA’s official press release on the matter states that historically similar claims have resulted with a penalty for the broker - which is bad news for FXDD. Only 12 brokers have remained servicing the US retail forex market after GFT’s recent withdrawal, and this will lead to a game of re-establishing positions and determining leaders - so it would be a really bad time for FXDD to be found guilty of cheating its customers. 
The NFA has given FXDD until December 14, 2012 to put the $3.3 million aside in an escrow account or post bond for this money, otherwise it will be forced to stop rendering services to traders. 

About FXDD

FXDD, a Foreign Exchange Dealer registered with the CFTC and a member of the National Futures Association (NFA), is headquartered in New York City's 7 World Trade Center.  FXDD is a leader in online Forex trading dedicated to providing superior customer service, powerful trading technology, and reliable streaming liquidity.  FXDD provides services to individual and institutional traders, hedge funds, commercial entities, brokerage firms and money managers around the world.  FXDD offers 24-hour Forex trading by way of its trading platforms, which include: MetaTrader, PowerTrader, Mirror Trader, and FXDDTrader. The Company's services currently provide competitive interbank pricing, no-interest accounts, and fully-automated execution. FXDD also provides 50:1 leverage in the US, as well as competitive bid-to-ask spreads.
TAGS: FXDD  NFA  CFTC  forex trading  forex broker  forex slippage  GFT  retail forex 

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