CFTC Sues Australian Broker Halifax Investment Services for Unlawfully Soliciting U.S. Customers

2 Comments

It’s strange to see firms regulated in ‘normal’ jurisdictions still doing something as risky as soliciting US retail forex clients. After two major sweeps by the CFTC in 2011 where 35 foreign firms in total were sued for doing the same you’d think other firms will know better. Many of the sued parties have since settled with the CFTC.

The only ones currently openly accepting American traders are offshore binary option brokers. Since there’s no suit by the CFTC against any of these brokers (though some were rumored to have been warned) one can assume there’s a legal obstacle here. There’s obviously no such obstacle when dealing with forex brokers however: According to the CFTC Australian Broker Halifax Investment Services operating Logo_Halifax-Logo_TOPhttp://www.halifax.com.au/ with AFSL 225973 license was soliciting American traders.

On October 18, 20 10, the Commission adopted new regulations implementing certain provisions of the Dodd-Frank Act and the CRA. For the purposes of retail forex transactions, the new regulations, among other things, require RFEDs to register with the CFTC.

15. On information and belief, Halifax, solicits or accepts orders from U.S. customers who are not ECPs to open leveraged forex trading accounts through Halifax’s website, http://www.halifax.com.au.

16. Customers open trading accounts by submitting an online account application through Halifax’s website. There is nothing in the online account application stating Halifax does not accept U.S. customers.

17. Halifax’s website includes a Forex Product Disclosure Statement (“Halifax Forex PDS”) which states that “each transaction which is agreed and entered into with a client will be entered into by Halifax as principal.” The website also states that customers are “dealing with Halifax as counterparty to every transaction.”

Halifax’s online account application does not seek any information about prospective customers’ ability to send or receive actual delivery of foreign currencies or customers’ business need for foreign currency.

19. Halifax’s online account application does not inquire as to whether a prospective customer is an ECP or about a prospective customer’s savings and investments. The online account application does not inquire if a prospective customer has assets in excess of $5 million.

20. The Halifax Forex PDS also states that Halifax is not involved in the physical delivery of trades, disclosing that forex transactions are “OTC” (over-the-counter) derivatives which do not require the physical exchange of one currency for another.

21. On September 11,2010, Halifax applied for membership with the National Futures Association (“NF A”) and registration with the CFTC to become an introducing broker (“IB”) in order to introduce U.S. customers to an RFED registered with the Commission.

22. On September 17, 2010, NF A advised Halifax that in order to conduct forex business going forward, it would be required to be fully registered with the CFTC by October 18, 2010.

23. During the registration process, NF A learned that Halifax accepted customer funds. On October 30, 2010, NFA advised Halifax that because it was accepting funds from customers, and an IB cannot accept customer funds, Halifax would have to register as an RFED and create a separate entity to register as an lB.

24. On November 3, 2011, Halifax advised NFA that it would “postpone its application.” On December 10, 2011, Halifax withdrew its application. On September 30,2011, despite the NFA’s notice that Halifax was required to register with the CFTC in order to conduct forex business, Halifax responded to a prospective U.S. customer that he needed only to provide certified copies of his U.S. passport and driver’s license to open an account.

26. Thus, Halifax has been and is acting as an RFED and continues to do so by soliciting orders from and offering to act as counterparty to U.S. customers to trade forex.

27. By the date of the filing of this complaint, Halifax has not registered with the Commission as an RFED or in any other capacity.

28. Furthermore, Halifax is not exempt from registration.







TAGS: , , , , , , , , , , , , , , , , , , , , , ,
 

Related posts:

More information on this subject is found in the latest Forex Magnates Quarterly Report


2 Comments on this post

Trackbacks

  1. Jon said:

    So will halifax continue with the solicitation, similar to FinFx, Traders Way and a few others that interpret US jurisdiction a bit differently?

    February 6th, 2013 at 5:40 pm
  2. Michael Greenberg said:

    if its AFSL is real and if it really white labels platforms from fxcm/saxo/etc like it seems – it would be hard for them as cftc may pull the plug on these things, but let’s see

    February 6th, 2013 at 5:41 pm

We do not store your information and we do not disclose our sources.


Leave your name/email (not required) if you'd like to be contacted about this story (will not be disclosed):



Digital Currencies

Executive Moves

Startups & New products

antony

“Meet The Experts” Announces Its Newest Contributor And Bitcoin Specialist, Antony Lewis

Forex Magnates’ “Meet the Experts” platform is pleased to announce its newest contributing expert, Antony Lewis, head of Business Development at Bitcoin exchange itBit, specializing...

Coinomat Launch Digital Currency Withdrawal Service to Visa & Mastercard

Cryptocurrency exchange service Coinomat are now supporting crypto coin withdrawals, allowing customers to transfer them to their Visa or Mastercard debit cards. Launched back in November...

NMC/USD Technical Analysis – 18th April 2014

Namecoin experiences massive gains from the 13th through till the 15th, more than doubling in value in barely a couple of days, but a powerful...

More Digital Currencies

Lloyds’ Global Head Of Spot Forex, Darren Coote Resigns

Darren Coote, the Global Head of Spot Foreign Exchange at Lloyds Banking Group Plc. has resigned from his position for personal reasons, leaving a notable...

Max Hayden

BCS Appoints Ex-BofA Merrill Lynch MD Max Hayden as Head of Business Development

The latest person to head BCS Financial Group's new business development efforts brings a nearly 30 year career holding senior roles in financial services including...

tomgav

Pete Sinisgalli Appointed New CEO at Eze Software Group, Succeeding Tom Gavin

Eze Software Group, a global provider of investment technology across all asset-classes, has announced the appointment of Pete Sinisgalli as its new CEO, succeeding Tom...

More Executive Moves

New Product Spotlight

IG_MarketsIG_logo

IG Markets the Latest Broker to Launch Web TV After Dukascopy and Saxo TV

Former Bloomberg and BBC presenters Jeremy Naylor and Sara Walker, will be the faces behind IG’s newest marketing initiative as it challenges other well known players in the field of broker-run web TV.
Read more

OANDA Launches Retail FX Tools Marketplace, Forex Magnates Reviews

OANDA opens a Marketplace featuring apps, training, and MT4 plugins developed by the broker and its partners to provide its clients with vetted tools and services. Forex Magnates reviewed the new offering.
Read more

More Startups & New Products

Forex Research

Recent Comments

Note: Copyright © 2014 Forex Magnates. All rights reserved.

All materials contained on this site are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of Forex Magnates. You may not alter or remove any trademark, copyright or other notice from copies of the content. All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you.Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

Opinions expressed at Forex Magnates are those of the individual authors and do not necessarily represent the opinion of Forex Magnates or its management. Forex Magnates has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur. Any opinions, news, research, analyses, prices or other information contained on this website, by Forex Magnates, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. Forex Magnates will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

©2014 "Forex Magnates Inc. - Home of the Forex Elite" All Rights Reserved.