29 October, AtoZForex.com, Lagos – Following up on earlier reports about FXCM’s issues with the The Autorité des Marchés Financiers (AMF), the French financial regulators have now levied a fine upon the broker for violations of codes of conduct, after a hearing was held about a week back.
FXCM violation
It was discovered by the AMF that between 2009 and 2011, FXCM housed three money managers. Who were at the time unauthorised to carry out activities of managing funds. This has led to the potential chastisement of the broker, arguing that FXCM should have been aware upon the dealing of the trio. Hence, knowing that the money managers are not permitted to carry out such regulated operations of managing funds, without a valid license in the jurisdiction. This case dates back to 2013, when the AMF discovered loopholes in FXCM’s operations during a check.
It is understood that the fine is therefore related to negligence on the path of the US headquartered FCXM, as the regulator's report points that the firm had failed to verify the authorization status of these three companies that had brought clients to the broker. As these these portfolio managers were later discovered to lack the necessary licenses to carryout their business, as well as lacking in fundamental competence.
The fine
The FXCM fined by AMF totals EUR 200,000 ($220,768) was therefore levied upon FXCM by the sanction commission after considering all factors. A reasonable sum we would say, considering that the broker is estimated to have generated a sum of EUR 393 447.84 from a total of 113 clients which were introduced to the broker by these three firms.
The eventual fine is actually a relief from initial speculated fine. A report in the online news agency L’Agence économique et financière (L’Agefi) earlier pointed that the fines could reach as high as EUR 1 million ($1.14m). Considering the total losses incurred by clients of the unauthorized portfolio managers.
After clarification of these facts, the broker has quit all affiliation with these firms. It has also put in place enhanced internal control measures to ensure proper checks on such partners or introducing brokers, in line with the rules of the regulators.
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