FXCM Issues Statement on CFTC Complaint
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FXCM Inc. /
FXCM Issues Statement on CFTC Complaint
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NEW YORK, Aug. 19, 2016 (GLOBE NEWSWIRE) -- FXCM Inc. (NYSE:FXCM) (or the
"Company"), today issued a statement on the complaint filed yesterday by the
Commodity Futures Trading Commission (the "CFTC") alleging violations of certain
provisions of the Commodity Exchange Act. The CFTC claims relate to the
unprecedented and unforeseen crisis that occurred in January 2015 - more than
twenty months ago - when the Swiss National Bank ("SNB") shocked the world
currency market by announcing in the middle of a trading day that it was
discontinuing the minimum exchange rate of the Swiss Franc to the Euro (the "SNB
Event"). The Company is very disappointed by the CFTC's decision to file this
complaint and attempt to punish FXCM who, like other market participants, was a
victim of the SNB Event.
The SNB Event damaged world markets and damaged FXCM and its customers. By the
close of business on January 15, 2015, FXCM customers lost approximately $225
million. As a result of such losses, FXCM experienced for the very first and
only time in its history a one-day regulatory net capital shortfall. FXCM
thereafter promptly notified both the CFTC and the National Futures Association
(the "NFA") of its net capital shortfall due to the unforeseen SNB Event.
Within hours of that notification, teams of CFTC and NFA personnel were on site
at FXCM's offices.
Faced with the crisis of the SNB Event, FXCM and its board of directors worked
around the clock to raise the funds needed to cure its regulatory shortfall. We
succeeded. By the next afternoon, the Company cured its capital shortfall
through a $300 million loan from Leucadia National Corporation. We averted the
crisis. Given those facts, we could not be more disappointed that the CFTC has
decided to pursue an undercapitalization violation claim against FXCM. Such a
claim under these circumstances is unprecedented and unwarranted. We are also
disappointed in the CFTC's intimation that the Company's "seatbelt" system
contributed to the FXCM's undercapitalization during the SNB Event. To the
contrary, the Company's seatbelt system prevented FXCM and its customers from
suffering additional trading losses that day.
Equally unwarranted is the CFTC's claim that the Company did not timely notify
the CFTC of its net capital shortfall. As noted above, the regulators were
fully apprised of the capital shortfall and, within hours of the SNB Event, the
CFTC and the NFA were on site at FXCM's offices.
We also see no basis for the CFTC's claim that the Company improperly guaranteed
customers that they would not lose money. To the contrary, FXCM repeatedly
represented to and warned its customers of the significant risks of trading FX
and that such trading is appropriate only for individuals who can assume risk of
loss in excess of their investment and margin deposit. In fact, FXCM customers
were required to acknowledge in writing that they received no guarantees of
profit or freedom of losses from FXCM or its representatives.
This action is unfortunate and disappointing, but the good news is that, because
we acted as expeditiously as we did in January 2015, we protected our clients,
we protected our employees, we protected our shareholders, and we protected our
franchise.
About FXCM Inc.
FXCM Inc. (NYSE:FXCM) is a leading provider of online foreign exchange (FX)
trading, CFD trading, spread betting and related services. Our mission is to
provide global traders with access to the world's largest and most liquid market
by offering innovative trading tools, hiring excellent trading educators,
meeting strict financial standards and striving for the best online trading
experience in the market.
Clients have the advantage of mobile trading, one-click order execution and
trading from real-time charts. In addition, FXCM offers educational courses on
FX trading and provides free news and market research through DailyFX.com.
Trading foreign exchange and CFDs on margin carries a high level of risk, which
may result in losses that could exceed your deposits, therefore may not be
suitable for all investors. Read full disclaimer.
Contacts
Jaclyn Sales, 646-432-2463
Vice-President, Corporate Communications and Investor Relations
jsales(at)fxcm.com
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(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: FXCM Inc. via GlobeNewswire
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