On Oct 26, 2015, the Autorité des marchés financiers (AMF), the financial regulator in France, announced that it had fined FXCM €200,000.
In 2013, the AMF had conducted an audit of FXCM to determine whether it was in compliance with its regulatory obligations. The AMF found that FXCM had accepted 113 clients from three companies from 2006 to 2010, and these companies were providing portfolio management services for the clients. The companies was had required the clients to sign up with FXCM. They were required to grant the companies a power of attorney to allow the companies to manage client funds and place trades on their behalf. These trades were made using automated trading robots. FXCM collected approximately €393,000 in commissions from these clients.
However, the AMF charged that FXCM failed to:
- verify whether the companies had the skills to manage FXCM clients using trading robots
- verify whether the companies had a license to provide portfolio management services
- verify what kind of services were being provided, and what the performance of the services was.
Based on the above, the AMF decided that FXCM was in contravention of the Monetary and Financial Code which states (translated) “When providing investment services and related services to customers, providers of investment services act honestly, fairly and professionally, serving the best interests of clients”.
FXCM admitted to not having taken the actions to verify the companies in question. However, in its defense it claimed that the specific regulatory requirements were not in place at the time that FXCM accepted the clients in question. However, the regulator noted that FXCM was required to verify its compliance with all existing clients once the new regulatory requirements came into effect.
So Is FXCM A Scam?
This failure by FXCM to comply with regulations appears to have been due to an oversight on their part. Therefore, we would not conclude that FXCM is a scam broker based on this violation. However, FXCM has been fined many times in the past by different regulators. It would be wise for potential or existing clients to consider these violations before deciding to do business with them.
FXCM is a large, publicly traded forex broker that was started in 1999. It has over 200,000 clients and transacts trillions of dollars of forex trades every year. It operates in many countries with offices in New York, London, Berlin, Sydney, Paris, Hong Kong and many others. It operates under regulatory oversight of the NFA, FCA, ASIC, among others. For more details, see our summary review of FXCM.
Author: Forex Scam Alerts Google+