FXCM to pay $650,000 CFTC fine over capital shortfall
NEW YORK FXCM Inc agreed to pay a $650,000 civil fine to settle U.S. Commodity Futures Trading Commission charges that the currencies broker was undercapitalized in January 2015 and was too slow to report the shortfall.
A consent order describing the settlement was filed on Monday with the federal court in Manhattan and approved by U.S. District Judge Katherine Forrest.
The settlement also resolved a claim that FXCM violated CFTC rules by representing to customers that it would limit their losses, through a policy of "zeroing out" negative balances.
FXCM did not admit or deny wrongdoing.
In a statement, FXCM said the settlement "brings to a close all material U.S. regulatory matters" affecting its U.S. unit, Forex Capital Markets LLC.
The settlement was disclosed one week after New York-based FXCM said it intended to pull out of U.S. retail foreign exchange, and sell its customer accounts to Gain Capital Holdings Inc.
That announcement accompanied a $7 million CFTC fine against FXCM and founding partners Dror "Drew" Niv and William Ahdout to resolve charges that over five years they concealed FXCM's close ties to a market maker that received favored treatment.
FXCM, Niv and Ahdout were also barred from markets overseen by the CFTC.
Monday's settlement stemmed from the Swiss National Bank's decision on Jan. 15, 2015 to eliminate a cap on the Swiss franc's value relative to the euro.
That decision caused the euro to plunge, and led FXCM a day later to report having lost more than $200 million as a result.
(Reporting by Jonathan Stempel in New York; Editing by Alan Crosby and Phil Berlowitz)