AUSTRALIAN FIRM RECEIVES PERMANENT INJUNCTION RESULTING FROM FAILING TO REGISTER WITH CFTC

FROM:  COMMODITY FUTURES TRADING COMMISSION 

April 25, 2014

CFTC Obtains a Permanent Injunction against Australian Firm Halifax Investment Services, Ltd., Charged with Acting as an Unregistered Retail Foreign Exchange Dealer

Action is a result of CFTC’s 2012 sweep against foreign currency firms for failure to register under the 2008 Farm Bill, the Dodd-Frank Act, and CFTC regulations

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge James B. Zagel of the U.S. District Court for the Northern District of Illinois issued a Consent Order of Permanent Injunction that bars Australian firm Halifax Investment Services, Ltd. from soliciting orders to trade foreign currency (forex) from United States residents who do not qualify as eligible contract participants (ECPs) and from offering to be the counterparty to United States residents’ forex transactions without registering with the CFTC.

The Order requires Halifax to publish a notice on its website stating that Halifax does not provide services for United States residents. The Order settles CFTC charges that Halifax unlawfully solicited members of the public to engage in forex transactions and operated as a Retail Foreign Exchange Dealer (RFED) without being registered with the CFTC (see CFTC Press Release 6508-13, February 5, 2013).

Specifically, the Order states that between October 18, 2010 and February 5, 2013, Halifax maintained a website that permitted United States residents who were not eligible contract participants to potentially apply to open leveraged forex trading accounts by submitting information online to Halifax’s website.

In the forex market, entities known as RFEDs or Futures Commission Merchants (FCMs) may buy forex contracts from, or sell forex contracts to, individual investors. Under the Commodity Exchange Act and CFTC regulations, an entity acting as an RFED or FCM must register with the CFTC and abide by rules and regulations designed for investor protection, including those relating to minimum capital requirements, recordkeeping, and compliance. Further, with a few exceptions, such an entity also must be registered with the CFTC if it solicits or accepts orders from U.S. investors in connection with forex transactions conducted at an RFED or FCM.