CFTC Fines Gain Capital UK with $500k Over Onboarding US Traders


Commodity Futures Trading Commission, CFTC fines Gain Capital UK (Gain UK) nearly $500K civil penalty. The regulator alleged Gain UK signed up US investors to its Forex trading without RFED, CEA and CFTC regulations.

09 June, 2020 | AtoZ Markets – GAIN Capital UK is a retail forex broker in the United States. It provides OTC and exchange markets trading services to retail traders and institutional investors. Moreover, London based broker, Gain UK was established in 1999.

CFTC Orders Gain Capital UK to Pay Nearly $500k

CFTC issued an order to settle charges against Gain Capital UK Limited over allegations of illegally signing up US investors on its FX trading platform. The CFTC also ordered to “stop and cancel” future transactions that violate the Commodity Exchange Act or CFTC rules.

From February 2014 to March 2019, the broker served US retail FX customers without the Retail Foreign Exchange Dealer (RFED) registration under the Commodity Exchange Act (CEA) and CFTC rules. The regulator said:

“Gain UK accepted customers who used US mailing addresses in account applications and provided documents such as lease agreements, utility bills, and health-insurance enrollment letters suggesting that they were located in the United States.”

Specifically, the FX broker was unable to detect a fraud warning sign by an unregistered CTA that invited retail FX customers to open an account with the broker. CFTC fines Gain Capital UK a civil penalty of $250,000 and disgorges of $241,671.

CFTC does not allow FX broker to act as counterparty to US retail FX traders unless registered with the CFTC, SEC or bank regulators. Besides, the broker must have the National Futures Association (NFA) approval. If a forex broker accepts a US retail customer without RFED or FCM, it will be subject to CFTC enforcement.

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