Foreign Exchange

July 11, 2017

The U.S. Commodity Futures Trading Commission (CFTC) filed a civil enforcement action in the U.S. District Court for the Eastern District of New York against Defendants Daniel Winston LaMarco and his company, GDLogix Inc., charging them with off-exchange foreign currency derivatives (forex) fraud, commodity pool fraud, and failure to register with the CFTC, as required. LaMarco previously resided in Huntington, New York, and GDLogix’s last known principal place of business was in Huntington, New York. Neither Defendant has ever been registered with the CFTC. CFTC

June 22, 2017

The U.S. Commodity Futures Trading Commission (CFTC) today filed a civil enforcement action in the U.S. District Court for the Southern District of New York against Defendants Michael S. Wright, of Jersey City, New Jersey, and his firm Wright Time Capital Group LLC, d/b/a Global FX Club(WTCG), a New York limited liability company, charging them with fraud, misappropriation, and issuing false account statements in connection with a pooled investment in foreign currency derivatives (forex) trading. The CFTC Complaint also charges WTCG with failing to register with the CFTC as a commodity pool operator (CPO), as required, and engaging in activities prohibited for a CPO, including commingling pool funds with Defendants’ funds. Specifically, the CFTC Complaint alleges that from approximately August 2010 through the present, Defendants engaged in a fraudulent scheme to solicit more than $400,000 from at least 10 members of the public, promising to use pool participant funds for forex trading. Defendants allegedly traded only a portion of pool participants’ funds and misappropriated the majority of those funds for unauthorized personal or business expenses such as food, clothing, jewelry, and entertainment. CFTC

June 5, 2017

The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a civil enforcement action in the U.S. District Court for the District of Utah against Tallinex a/k/a Tallinex Limited (Tallinex), of Tallinn, Estonia, and General Trader Fulfillment (GTF), a Nevada company doing business in Pleasant Grove, Utah. The CFTC’s Complaint charges Tallinex with operating as a Retail Foreign Exchange Dealer (RFED), without being registered as such with the CFTC, and with fraudulently soliciting U.S. resident customers to trade leveraged foreign currencies (forex). The Complaint charges GTF with acting as an unregistered Introducing Broker (IB) by soliciting U.S. customers to open forex trading accounts with Tallinex. Specifically, from at least September 2012 and continuing to at least September 2016, Tallinex fraudulently solicited and accepted at least $1.5 million from U.S. customers in connection with leveraged or margined forex transactions, to which it was or offered to be the counterparty. Moreover, according to the Complaint, in the course of soliciting retail forex customers, Tallinex made fraudulent misrepresentations and omissions of material fact and engaged in fraudulent and deceptive business practices. CFTC

April 20, 2017

The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a civil enforcement action in the U.S. District Court for the Central District of California, Eastern Division, against Capitol Equity FX LLC (Capitol Equity), a purported hedge fund operating in California, and its principals and agents, Robert Leland Johnson IV and Marisa Elena Johnson, both of Chino, California (collectively, Defendants). The CFTC Complaint, filed on April 19, 2017, charges Defendants with commodity futures fraud; off-exchange, leveraged or margined retail foreign currency (forex) fraud; commodity pool fraud; and failure to register with the CFTC, as required. The Complaint also charges Capitol Equity with engaging in activities prohibited for a commodity pool operator, including commingling customer funds with Defendants’ personal funds. CFTC

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

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