Broker Warning – NFA takes emergency enforcement action against FXDD
Well, it seems the NFA have asked FXDD to place funds in an account to cover any potential penalty they may incur from a case against them earlier in the year:
“National Futures Association (NFA) has ordered FX Direct Dealer, LLC (FXDD) to either post a bond or place funds in an escrow account to ensure that the firm can meet its obligations under any restitution order that may result from a related NFA disciplinary action. The customer restitution is estimated to be $3.3 million….”
http://www.nfa.futures.org/news/newsRel.asp?ArticleID=4166
“….2. In the event FXDD fails to comply with the requirements of paragraph 1, above, by Noon (CDT) on Friday, December 14, 2012, the following measures will become effective immediately:
a. FXDD shall be prohibited from accepting or placing trades for any customer accounts except for the rollover of currently existing customer positions and/or liquidation of existing customer positions. In taking any action to rollover or liquidate customer positions, FXDD must act in the best interest of its customers.
b. FXDD shall be required to liquidate all positions held in any account for any FXDD principal, employee, or affiliate and is prohibited from initiating any additional positions in such accounts; and
c. FXDD shall be prohibited from distributing, disbursing or transferring any funds, except to existing customers, without the prior approval of NFA. Further, FXDD shall be required to provide notice to NFA of any distribution, disbursal or transfer of any funds to any customer on the same business day that any such distribution, disbursal or transfer occurs. Such notice shall include, at least, the date of the distribution, the name, address and account number of the recipient, identification of the FXDD account from which funds are distributed and to which funds are distributed, and the amount of the distribution….”
http://www.nfa.futures.org/basicnet/Case.aspx?entityid=0397435&case=12MRA00009&contrib=NFA
You can find details of the original complaint against FXDD here:
http://www.nfa.futures.org/basicnet/CaseDocument.aspx?seqnum=3347
https://www.megadroidresults.com/2012/07/04/broker-warning-fxdd-charged-by-nfa/
I had a quick look at their capitalisation and it seems they only had an excess capitalisation of around 6 million at the end of September.
http://www.cftc.gov/ucm/groups/public/@financialdataforfcms/documents/file/fcmdata0912.pdf
This is a concern. I’m considering closing my account.
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