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Foreign Exchange

This archive displays posts tagged as relevant to foreign exchange or ForEx fraud. You may also be interested in the following pages:

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February 6, 2017

Forex Capital Markets, LLC, its parent company FXCM Holdings, LLC and its two founding partners Dror (“Drew”) Niv and William Ahdout were ordered to pay a $7 million penalty for defrauding retail forex customers. The CFTC Order found that between 2009 and at least 2014, the companies engaged in false and misleading solicitations of retain forex customers by concealing relationships with important market makers and misrepresenting conflicts of interest. CFTC

January 9, 2017

EJS Capital Management, LLC,  Alex Vladimar Ekdeshman, and Edward J. Servider were ordered to pay over $11.6 million in sanctions for their role in a fraudulent, off-exchange foreign currency scheme involving misappropriation of customer funds and false statements to customers to conceal the fraud. The order was entered by the United States District Court for the Southern District of New York. A number of Relief Defendants were ordered to pay $760,375 in disgorgement. CFTC

Russian Roulette in Futures Trading: The CFTC Cracks Down on Fictitious Trades

Posted  09/21/16
By Ronny Valdes On Monday September 19th, the U.S. Commodity and Futures Trading Commission (CFTC) announced the filing and simultaneous $5 million settlement of charges against JSC VTB Bank (VTB), a Russian state-backed lender, for executing fraudulent ruble-dollar trades. VTB and its U.K subsidiary, VTB Capital PLC (VTB Capital), were accused of executing noncompetitive and fictitious block trades in ruble-dollar...

August 18, 2016

Forex Capital Markets, LLC was charged with undercapitalization, failure to timely report that undercapitalization violation, and guaranteeing against customer losses.  CFTC

August 12, 2016

Ralph Metters, formerly of Los Angeles, California, was ordered to pay $1 million in penalties and disgorgement in connection with operating an off-exchange foreign currency fraud scheme.  CFTC

July 26, 2016

Massachusetts-based State Street Bank and Trust Company agreed to pay a total of at least $382.4 million -- including $155 million to the DOJ, $167.4 million in disgorgement and penalties to the SEC, and at least $60 million to ERISA plan clients in an agreement with the Department of Labor -- to settle allegations that it deceived its custody clients when providing them with indirect foreign currency exchange (FX) services.  According to the government, State Street admitted that contrary to its representations to certain custody clients, it did not price FX transactions at prevailing interbank market rates and instead executed FX transactions by applying a predetermined, uniform mark-up (if the custody client was a FX purchaser) or mark-down (if the custody client was an FX seller) to the prevailing interbank rate for FX.  State Street is also alleged to have falsely informed custody clients that it provided “best execution” on FX transactions, that it guaranteed the most competitive rates available on FX transactions and that it priced FX transactions based on a variety of factors when, in fact, prices were largely driven by hidden mark-ups designed to maximize State Street’s profits.  The allegations originated from famed Bernie Madoff whistleblower Harry Markopolos under the whistleblower provisions of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).  State Street will pay an additional $147.6 to resolve private class action lawsuits filed by the bank’s customers alleging similar misconduct.  DOJ

July 26, 2016

State Street Bank and Trust Company will pay $382.4 million in a global settlement for misleading mutual funds and other custody clients by applying hidden markups to foreign currency exchange trades.  As part of its custody bank line of business, State Street safeguards clients’ financial assets and offers such services as indirect foreign currency exchange trading (Indirect FX) for clients to buy and sell foreign currencies as needed to settle their transactions involving foreign securities.  An SEC investigation found that State Street realized substantial revenues by misleading custody clients about Indirect FX, telling some clients that it guaranteed the most competitive rates available on their foreign currency trades, provided “best execution,” or charged “market rates” on the transactions.  Instead, State Street set prices largely driven by predetermined, uniform markups and made no effort to obtain the best possible prices for these clients.  State Street will pay $167.4 million in disgorgement and penalties to the SEC, a $155 million penalty to the Department of Justice, and at least $60 million to ERISA plan clients in an agreement with the Department of Labor.  SEC

July 28, 2016

State Street Bank and Trust Company (State Street) will return $75 million in profits to resolve allegations it provided misleading information as to how it priced foreign exchange transactions, Massachusetts announced. The agreement is part of a $382 million federal-state global resolution in conjunction with the U.S. Securities and Exchange Commission, the U.S. Department of Justice, and the U.S. Department of Labor, along with three class action lawsuits. The agreement with the AG’s Office requires State Street to provide $75 million in disgorgement, along with a payment of $500,000 to the Commonwealth. Additional disgorgement and penalties will be paid by State Street through separate agreements with federal enforcement entities. MA

June 2, 2016

The SEC charged New York City-based trader Haena Park with defrauding investors out of millions of dollars by misrepresenting her investment track record, the profitability of her investments, and her use of investor funds.  The SEC alleges that Park touted her supposedly profitable futures and foreign exchange trading strategy when soliciting friends, family, former Harvard classmates, and individuals with connections to them.  She pooled investor finds and incurred heavy trading losses month after month in the futures and forex markets, yet repeatedly told investors that their investments were profitable and sent them monthly account statements showing fictitious profits.  She raised at least $14 million from more than 30 investors since 2012, and has suffered more than $16 million in trading losses during that time.  SEC

April 12, 2016

Brian Hinman agreed to pay over $1 million in penalties and disgorgement to settle charges that he aided and abetted Kevin White's Texas-based entities’ RFF GP, LLC and KGW Capital Management, LLC, in a scheme that fraudulently solicited participants in a foreign currency exchange pool named Revelation Forex Fund, LPCFTC


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