BULLETIN: CFTC Conducts Major Sweep; 14 Forex Firms Accused Of Illegal Solicitation Of U.S. Citizens; Actions Filed In New York, Chicago, D.C. And Kansas City
BULLETIN: The Commodity Futures Trading Commission has gone to federal courts in New York, Chicago, the District of Columbia and Kansas City and simultaneously filed 14 lawsuits against Forex companies to enforce registration requirements and provisions of the Dodd-Frank Act.
One of the lawsuits — one filed in the District of Columbia against a Nevada company known as Kingdom Forex Trading and Futures Ltd. that claims to be a “legally registered company in Belize and Nevis” — alleges that the firm was not registered with the CFTC but that U.S. customers were instructed to send money via wire and credit/debit cards. Money also can be sent by Liberty Reserve, a payment processor favored by online financial schemes. Liberty Reserve says it operates from Costa Rica.
The case against Kingdom Forex has been assigned to U.S. District Judge Rosemary Collyer, the same judge assigned to hear the AdSurfDaily autosurf Ponzi scheme cases.
This morning, Liberty Reserve was advertising on its website a company known as FXOpen.com. FXOpen.com, according to the CFTC, is the website of a firm known as FXOpen Investments Inc. — yet-another of the defendants sued in the sweep.
FXOpen is described in the complaint as “company of undisclosed origin” that claims “its headquarters is located at Ebene Heights No. 34, Cybercity Ebene, Mauritius.”
It also claims to have “worldwide regional offices” in Cairo, Egypt; Paris, France; Kuala Lumpur, Malaysia; Jakarta, Indonesia; Almaty, Kazakhstan; and Moscow, Russia, CFTC charged.
“FXOpen’s websites, including www.fxopen.com, are hosted on servers” in the United States, CFTC charged in the complaint.
The firm, whose website would not load this morning when visitors clicked the link at the Liberty Reserve page, is accused of directly soliciting U.S. investors and claiming U.S. law does not apply to it.
“[I]n the ‘Forum’ section of its website, FXOpen representatives specifically solicit United States residents to open accounts with FXOpen, in part by advertising that potential customers in the United States can escape United States laws and regulations by opening accounts with FXOpen,” CFTC charged.
“For example, on October 5, 2010, in response to a question regarding whether FXOpen could accept applicants from the United States after October 18, 2010 following recent CFTC rulings, an FXOpen representative answered with a post, stating, ‘Since we don’t have an office in the US, nor are we an affiliate of a US based broker, we are not bound by CFTC rulings. Rest assured we will be able to accept US clients for the foreseeable future unless a legal impediment appears,’” CFTC charged in the complaint.
All of the companies named defendants in the sweep are accused of “illegally soliciting members of the public to engage in foreign currency (forex) transactions and that they are operating without being registered with the CFTC,” the agency said.
Among the defendants are domestic and offshore companies.
Here is the lineup of defendants in what the CFTC described as a major nationwide sweep:
- EuroForex Development LLC, a Delaware LLC.
- FIG Solutions Limited Inc., a Delaware corporation.
- ForInvest, a Delaware corporation.
- FXOpen Investments Inc., a Delaware LLC.
- FXPRICE, a Delaware LLC.
- GIGFX LLC., a Delaware company.
- InovaTrade. Inc., a company with purported offices in Florida.
- InstaTrade Corp., d/b/a InstaForex, a British Virgin Islands company.
- InvesttechFX Technologies. Inc., a Canadian corporation located in Toronto.
- J&K Futures. Inc., a company with purported offices in California and New York.
- Kingdom Forex Trading and Futures. Ltd., a Nevada company.
- Prime Forex LLC, a Delaware LLC.
- Wall Street Brokers LLC, a Delaware LLC.
- ZtradeFX LLC, a Connecticut LLC.