The NFA has filed complaints against FxDirectDealer LLC and James Emerson Green, who was FXDD’s Chief Compliance Officer at the time.
The case summary is…
On June 29, 2012, NFA issued a Complaint charging FXDD with using asymmetrical price slippage settings that favored FXDD over customers; failing to supervise the trade integrity of the firm’s electronic trading systems; failing to maintain complete and accurate records; failing to review the use of promotional material; making improper price adjustments in customers’ accounts; knowingly converting customer funds; failing to implement an adequate AML program; and failing to develop and implement adequate procedures to ensure that all entities and persons that the firm does business with are registered with the CFTC and NFA Members. The Complaint also charged FXDD and Green with willfully submitting misleading information to NFA and others; failing to treat all customers equally when giving price adjustments; and failing to supervise.
The case details file shows that the NFA accuses FXDD of gaining more than 3 million dollars from this differential slippage scheme.
What is more interesting is that FXDD is accused of unilaterally removing profits from client accounts because the customers had “manipulated” FXDD’s trading system by executing trades at “off-market” prices.
FXDD did not contact the NFA about this. When the NFA became aware, they asked FXDD for evidence. Here are some selected quotes…
“Over the course of several weeks, from December 2011 to early February 2012, FXDD failed to produce any credible support to substantiate its claim that these customers had manipulated the firm’s trading platform or executed orders at “off-market” prices.”
“NFA repeatedly advised Green that these actions on the part of FXDD constituted violations of Compliance Rule 2-43…”
“However, NFA later learned that FXDD’s supposed return of profits it had removed from the nine customer accounts was illusory and was apparently merely a ploy to mislead the NFA and buy time for FXDD to file suit seeking a temporary restraining order and preliminary injunction against the nine customers.”
FPA member Raimundas is one of those dealing with FXDD’s refusual to comply with the NFA.
There are other issues in the complaint. You can read them by following these links…
Click here to read the NFA’s complaint against FXDD. Please check paragraphs 33-50 to see more about the situation Raimundas is dealing with.
News source: Forex Peace Army