Disappointed CFTC to pursue violation claim vs the company
The CFTC yesterday announced that they were charging FXCM with undercapitalization, guaranteeing loss protection and failing to timely report its undercapitalization stemming from the SNB de-pegging back in January 15, 2016.
The firm admitted to the CFTC that their capital dropped into negative territory by at least 200 million. The net liabilities exceeded assets by $175 million.
The day after the shortfall, the company received a lifeline from Leucadia National of $300 million and the firm survived.
Now the CFTC is digging up the bones with the "civil enforcement action".
The firm has responded to the action.
Some comments:
- Such a claim is unprecedented and unwarranted.
- The firm says the "regulators were fully apprised of the capital shortfall and, within hours of the SNB Event, the CFTC and the NFA were on site at FXCM's offices"
- The firm also objects to claims that the company improperly guaranteed customers that they would not lose money. The firm says that they repeatedly represented to and warned its customers of the significant risks of trading FX and that such trading is appropriate only for individuals who can assume risk of loss in excess of their investment and margin deposit. They add, that customers were required to acknowledge in writing that they received no guarantees of profit or freedom of losses from FXCM or its representatives
The shares are currently trading at $9.50, down 6.59%. The 12 month high close is $19.80, while the low was $5.30.
