February 9, 2012
CFTC Obtains Permanent Injunction against British Virgin Island Firm InterForex, Inc. for Acting as an Unregistered Retail Forex Dealer; Firm Ordered to Modify Website
Action part of CFTC’s second nationwide sweep against foreign currency firms for failure to register under the 2008 Farm Bill, the Dodd-Frank Act, and CFTC regulations
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court consent order that permanently bars defendant InterForex, Inc., of Tortola, British Virgin Islands, from soliciting or accepting orders to trade foreign currency (forex) from U.S. customers who are not Eligible Contract Participants (ECPs). The order also permanently bars InterForex from offering to be the counterparty to U.S. customers’ forex transactions, without registering with the CFTC.
The order, entered on February 2, 2012, by Judge Rebecca R. Pallmeyer of the U.S. District Court for the Northern District of Illinois, also requires InterForex to prominently display a notice on its website that InterForex does not provide services for U.S. customers.
The order settles CFTC charges that InterForex unlawfully solicited U.S. customers to engage in forex transactions and operated as a Retail Foreign Exchange Dealer (RFED) without being registered with the CFTC (see CFTC Press Release 6108-11, September 8, 2011).
Specifically, the order finds that between October 18, 2010, and September 8, 2011, InterForex solicited orders from U.S. customers who were not ECPs to open leveraged forex trading accounts through its website. During the period, InterForex’s website did not impede U.S. residents from applying for forex accounts; however, InterForex did not accept orders from any U.S. customers, according to the order. The order finds that InterForex acted as an RFED by offering to take the opposite side of retail customers’ forex transactions (i.e., offered to act as a counterparty) without being registered as an RFED and also solicited U.S. customers to open a variety of forex trading accounts without being registered, in violation of the Commodity Exchange Act (CEA) and applicable CFTC regulations.
In the forex market, entities known as RFEDs as well as entities known as Futures Commission Merchants (FCMs) may buy forex contracts from, or sell forex contracts to, individual investors. Under the CEA and CFTC regulations, an entity acting as an RFED or an FCM must register with the CFTC and abide by rules and regulations designed for investor protection, including those relating to minimum capital requirements, recordkeeping, and compliance. Further, with a few exceptions, such an entity also must be registered with the CFTC if it solicits or accepts orders from U.S. investors in connection with forex transactions conducted at an RFED or FCM.
The CFTC thanks the British Virgin Islands Financial Services Commission for its assistance.
CFTC Division of Enforcement staff responsible for this action are Jennifer Diamond, Elizabeth Streit, Joy McCormack, Elizabeth Padgett, Amanda Harding, Scott Williamson, Rosemary Hollinger, Rick Glaser, and Richard Wagner.
CFTC customer protection information for retail forex customers
The CFTC strongly urges the public to check whether a company is registered before investing funds. If a company is not registered, an investor should be wary of providing funds to that company. A company’s registration status can be found on the National Futures Association’s website at http://www.nfa.futures.org/basicnet.
Before investing money in the forex market, the CFTC also strongly urges members of the public to review the CFTC’s forex consumer protection advisories listed below:
CFTC Consumer Advisory: Forex Fraud
If it sounds too good to be true, it probably is!
Fraud Advisory from the CFTC: Foreign Currency Trading (Forex) Fraud
Foreign Exchange Currency Fraud: CFTC/NASAA Investor Alert
Last Updated: February 9, 2012