CFTC Sues Halifax Investment Services for Illegal Solicitation of Forex Orders

CFTC v. Halifax Investment Services, Ltd., Case No. 1:13-cv-00892 (E.D.Ill.).  On February 5, 2013, the CFTC announced charges against Halifax Investment Services, Ltd. of Sydney, Australia relating to the solicitation and acceptance of forex orders from U.S. customers without the requisite CFTC registration.  The CFTC alleges that in the forex market, entities known as Retail Foreign Exchange Dealers (RFEDs) may buy foreign currency contracts from, or sell foreign currency contracts to, individual investors.  However, after the passage of the Dodd-Frank Act, with a few exceptions, an entity acting as an RFED must register with the CFTC and abide by CFTC rules and regulations designed for investor protection.  The CFTC alleges that Halifax acts as an RFED and solicited and accepted orders from non-eligible contract participants (non-ECPs) located in the U.S. without being registered with the CFTC as an RFED. The CFTC also alleges that Halifax operates a website that permits U.S. customers to open trading accounts by submitting online account applications, and that nothing in Halifax’s online account application states that Halifax does not accept U.S. customers or precludes non-ECPs from opening forex accounts with Halifax.  The CFTC seeks injunctive relief, civil monetary penalties, trading and registration bans, disgorgement, and rescission.

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