CFTC orders IB Capital FX to pay over $35 mln restitution

The CFTC orders IB Capital FX to pay a fine of $35 million. Why did the regulator charge the New Zeland-registered Forex Broker? 

17 November, AtoZForex The US Commodity Futures Trading Commission (CFTC) reported its decision to impose charges on IB Capital FX and its two agents. The companies and its employees were soliciting funds for retail forex trading without being registered with the regulator. Three entities have to pay altogether $35.42 million.

CFTC orders IB Capital FX to pay a penalty: how the fraud was executed? 

IB Capital FX is a New Zealand-registered forex broker, known as the IB Capital. According to the regulator, the company along with its two agents, Michel Geurkink and Emad Echadi, unlawfully received around $50 million from 1,850 clients in the US and other countries. However, none of them were registered with the regulator. Furthermore, the brokerage and its two employees were not qualified to be released from the requirement to be registered.

IB Capital FX was allegedly executing these operations during the period between the 1st of January 2012 and the 18th of September 2012. The wrongdoers generated approximately $35 million by accepting forex orders and acting as a counterparty on the clients’ trades, violating US regulations.

What are the other measures except for the penalty?

Nevertheless, the order mentioned that Michel Geurkink and Emad Echadi reimbursed to customers a portion of the $51.6 million in the form of refunds, redemptions, and other payments. Consequently, the CFTC aims to fully compensate losses of victims, disgorgement of any ill-gotten gains and a civil monetary ‎fee.

Additionally to fiscal penalties, the CFTC attempts to ban the agents from working for a registered retail foreign exchange dealer in the future or registering themselves.

Finally, the CFTC alerted victims that they may not be able to return their lost funds as the scammers may not have enough of funds. However, the regulator will still be aiming to obtain the restitution. In addition, the regulator commented that it partnered with regulators from various jurisdictions all over the world, including the Australia's ASIC, the UK's FCA, the New Zealand's FMA.

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