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NOTICE OF MEMBER RESPONSIBILITY ACTION:
On December 7, 2012, NFA's Executive Committee issued a Member Responsibility Action (MRA) against FX Direct Dealer, LLC (FXDD), whereby:
1. Prior to the resolution, and during the pendency, of In the Matter of FX Direct Dealer, LLC, NFA Case No. 12-BCC-021 ("BCC case"), FXDD must demonstrate to NFA that it is financially able to make restitution to customers in the amount of approximately $3.3 million for damages allegedly sustained by customers as a result of FXDD's asymmetrical price slippage practices, as alleged in the Complaint in the above-cited case. In order to demonstrate its ability to make restitution to customers, FXDD is required to deposit – and keep on deposit during the pendency of the BCC case – $3.3 million in a bank escrow account or in an attorney trust account, acceptable to NFA, or post a bond in such amount with NFA. Moreover, FXDD may not consider any funds on deposit in a bank escrow account or attorney trust account as a current asset for purposes of calculating the firm's capital, as such funds are restricted. FXDD's obligation, hereunder, shall terminate when all of the following conditions have been met: the BCC case is resolved; there is a final determination of the amount of restitution, if any, that FXDD owes to customers as a result of its asymmetrical price slippage practice; and FXDD fully pays customers such restitution amount, if any, as finally determined.
2. In the event FXDD fails to comply with the requirements of paragraph 1, above, by Noon (CDT) on Friday, December 14, 2012, the following measures will become effective immediately:
a. FXDD shall be prohibited from accepting or placing trades for any customer accounts except for the rollover of currently existing customer positions and/or liquidation of existing customer positions. In taking any action to rollover or liquidate customer positions, FXDD must act in the best interest of its customers.
b. FXDD shall be required to liquidate all positions held in any account for any FXDD principal, employee, or affiliate and is prohibited from initiating any additional positions in such accounts; and
c. FXDD shall be prohibited from distributing, disbursing or transferring any funds, except to existing customers, without the prior approval of NFA. Further, FXDD shall be required to provide notice to NFA of any distribution, disbursal or transfer of any funds to any customer on the same business day that any such distribution, disbursal or transfer occurs. Such notice shall include, at least, the date of the distribution, the name, address and account number of the recipient, identification of the FXDD account from which funds are distributed and to which funds are distributed, and the amount of the distribution.
This action is effective immediately and is deemed necessary to protect FXDD's customers and former customers who were harmed by FXDD's asymmetrical price slippage practices and ensure that they receive full restitution from FXDD for the damages they sustained as a result of such practices, which are alleged to total approximately $3.3 million.
The MRA shall remain in effect until the resolution of the BCC case and upon a final determination of the amount of restitution, if any, that FXDD owes to customers as a result of its asymmetrical price slippage practices.