September 30, 2013
FXDirectDealer, LLC Ordered to Pay $275,000 Penalty to Settle CFTC Charges of Violating Minimum Financial Requirement Rules
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges that, between November 2010 and December 2012, FXDirectDealer, LLC (FXDD), a CFTC-registered Retail Foreign Exchange Dealer (RFED) and Futures Commission Merchant (FCM) headquartered in New York, New York, failed to comply with minimum financial requirements for RFEDs and FCMs. FXDD has been registered with the CFTC as an FCM since December 10, 2009 and as an RFED since September 2, 2010.
Effective October 18, 2010, the CFTC adopted comprehensive rules to protect members of the public who buy foreign currency (forex) contracts from, or sell forex contracts to, forex firms. Under these rules, RFEDs and FCMs that offer or engage in retail forex transactions must at all times maintain adjusted net capital of $20 million, or more in certain circumstances.
According to the CFTC Order, FXDD did not maintain its required adjusted net capital during at least 18 separate months between November 2010 and December 2012, with month-end adjusted net capital computations showing that FXDD was undercapitalized by more than $7.5 million at one point. Because FXDD reported its adjusted net capital on a consolidated basis with its subsidiary, FXDD apparently did not realize that, on the required stand-alone basis, it failed to satisfy its adjusted net capital requirements throughout most of this period, the Order finds.
The Order imposes a $275,000 civil monetary penalty and a cease and desist order against FXDD for its violations. The Order notes that in settling this matter, the CFTC took into account FXDD’s cooperation and the corrective action it undertook after its deficiencies were discovered.
The CFTC thanks the National Futures Association for its assistance.
CFTC Division of Enforcement staff members responsible for this case are Rachel Hayes, Thomas Simek, Charles Marvine, Rick Glaser, and Richard Wagner. Kevin Piccoli, Ronald Carletta, Robert Loeber, and Nicholas Chiacchere of the CFTC’s Division of Swap Dealer and Intermediary Oversight also assisted in this matter.
Last Updated: September 30, 2013