Forex Dealer Fined for Doing Business with Unregistered Client
A forex dealer agreed to pay a $200,000 fine for doing business with an unregistered entity that claimed an exemption from registration. According to the National Futures Association, the respondent’s client, a currency-based hedge fund, claimed the de minimis exemption from commodity pool operator registration. The NFA asserts that the respondent “did not take adequate steps” to determine if the client qualified. NFA Rule 2(36) prohibits an NFA member from transacting with firms required to be registered.
OUR TAKE: The SEC and FINRA have similarly asserted that industry gatekeepers need to police others and cannot simply rely on representations that can be checked with minimal due diligence.