Why FXCM is sentenced to pay a fine of 200,000 euros

FXCM or Forex Capital Markets is an online broker specialising in forex and CFDs that offers its services legally to interested French investors. Recognized by regulatory bodies (ACP or Autorité de Contrôle Prudentiel and AMF or Autorité des Marchés Financiers), it is a broker that can be described as trustworthy. One can only be surprised to learn that he was sentenced to pay a fine of 200,000 euros. Explanations on this sanction…

Sanctioning of FXCM by the AMF

The AMF, which is rightly nicknamed “the stock exchange police”, has taken a decision: its Enforcement Committee has sanctioned the online broker FXCM. The latter was thus reprimanded and fined 200,000 euros. Why? Why? Due to negligence towards many business contributors. This decision was published on the AMF website. Its Enforcement Committee was more lenient in knowing that this regulatory body had recommended a fine of €1 million.

The situation..

fxcm traderThis decision was taken the day after a case involving the online broker FXCM and business contributors. More specifically, there were these three companies that submitted clients to the broker in exchange for a commission.

In total, there were 113 clients who were obtained in this way. They then registered with FXCM but did not trade directly. It was the business providers who obtained a power of attorney and then used trading robots and previously defined investment strategies.

It is this process that is pointed out by the AMF, which considers that these companies were acting as portfolio managers without being authorised. It was then to the broker that the stock exchange constable turned to: FXCM should have checked whether these companies were properly authorized to carry out this type of activity.

justice sanctionAbove all, 83% of the traders concerned suffered losses amounting to two million euros. Not to mention that the online broker was able to record an increase in his own income of around 400,000 euros.

In the end, the Enforcement Committee nevertheless welcomed the final decision taken by FXCM, which cut off contact with the contributors of the cases in question from the time the audit report became available. In addition, the broker has made changes in its internal control policy with respect to these business providers. The question is whether this case will have an impact on the broker’s activities and reputation…