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September 18, 2013
NFA fines New York forex firm FXDirectDealer LLC $1.1 million and orders the firm to pay $1.8 million in restitution to customers
September 18, Chicago - National Futures Association (NFA) has issued a $1.1 million fine and a $1.8 million restitution order against FXDirectDealer LLC (FXDD), a registered futures commission merchant Forex Dealer Member of NFA located in New York City. The Decision, issued by NFA's Hearing Committee (Committee), is based on Complaints filed on June 29 and October 23, 2012 and a settlement offer submitted by FXDD.
The June 29 Complaint charged FXDD with using asymmetrical price slippage settings that favored FXDD over its customers; failing to supervise the trade integrity of the firm's electronic trading systems; failing to maintain complete and accurate records; and failing to review the use of promotional material. The June Complaint also charged FXDD with making improper price adjustments in customers' accounts; converting customer funds; willfully submitting misleading information to NFA and others; and failing to treat all customers equally when giving price adjustments.
In addition, the June Complaint charged FXDD with failing to implement an adequate anti-money laundering (AML) program; failing to develop and implement adequate screening procedures to determine whether persons and entities with whom FXDD intended to do forex business were required to be registered with the Commodity Futures Trading Commission (CFTC) and Members or Associates of NFA.
The October 23 Complaint charged FXDD with failing to implement an adequate AML program and failing to adequately supervise the firm's AML program.
As part of the settlement offer, FXDD agreed to pay restitution in the amount of $1,828,261 to FXDD customers who experienced unfavorable price slippage on "limit-fill-or-kill" trades placed in their accounts from December 10, 2009 until June 29, 2011.
In addition, FXDD will pay a fine of $1.1 million, of which $914,131 is attributable to FXDD's unfavorable price slippage practices. In a related action taken by the Commodity Futures Trading Commission, FXDD will pay an additional penalty of $914,131 to the CFTC.
FXDD neither admitted nor denied the allegations.