We are holding this joint press briefing with the National Futures Association
to discuss the positive forex clarification in the Commodity Futures
Modernization Act of 2000 (CFMA) and the recently approved NFA rules
designed to address customer protection issues in the retail off-exchange
foreign currency (forex) futures and options market.
Before the CFMA was enacted in December 2000, federal case law had clouded the
issue of whether the Commission had jurisdiction to prosecute those who
operated illegal, off-exchange foreign currency businesses, or who defrauded
customers in off-exchange forex trading. Congress, in passing the CFMA,
clarified our jurisdiction giving us explicit, affirmative jurisdiction over
these foreign currency transactions.
We are here today here to discuss the partnership and cooperation between the
NFA and the CFTC, which has benefited from this clarified authority and has
allowed us to aggressively crack down on illegal forex bucket shops.
Since the passage of the CFMA, the CFTC’s Division of Enforcement has
filed 41 forex cases in eleven states: 14 in Florida; 10 in California; 6 in
New York; 3 in Georgia; 2 in Utah; and one each in Michigan, North Carolina,
Ohio, Oregon, Texas, and Washington. The defendants in these actions scammed
approximately 3,400 retail investors.
Our Enforcement Division received cooperative assistance in most of these
actions from the NFA, as well as from a number of state authorities, including:
the Florida Comptroller's Office, Georgia’s Secretary of State and
Office of Consumer Affairs, the Utah Department of Securities, the New York
Attorney General's Office, North Carolina’s Secretary of State
(Securities Division), the Oregon Department of Consumer and Business Services
(Division of Finance and Corporate Securities), the Louisiana Attorney
General's Office and the Louisiana Department of Justice, the Palm Beach
County Florida Police Department, and the Broward County Florida Sheriff's
Office. We have also received cooperative enforcement assistance from various
federal authorities, including: the United States Attorneys’ offices in
Portland, Oregon, North Carolina, the Northern District of Georgia, and
Florida; the Postal Inspectors’ offices in New York and Florida; the
FBI’s offices in Florida, California, Georgia, Oregon, and Ohio; the IRS
Office in Portland, Oregon; and the Senate Permanent Subcommittee on
As a result of these CFTC prosecutions, the defendants were hit with large
penalties. Civil monetary penalties levied thus far total nearly $93 million.
The cumulative restitution and disgorgement amounts imposed total nearly $74.4
million. In sum, the sanctions against forex defendants amount to nearly $167.4