CFTC refuses to amend complaint against TFS-ICAP

Maria Nikolova

The regulator says the defendants raise trifling arguments as they try to push the CFTC to amend its complaint.

The United States Commodity Futures Trading Commission (CFTC) has responded to the Letter sent by TFS-ICAP LLC and TFS-ICAP Ltd. which have insisted that the CFTC Complaint against the companies contains numerous deficiencies and, hence, has to be amended.

In its response filed earlier this week, the US regulator insists that TFS-ICAP LLC and TFS-ICAP Ltd. raise trifling arguments and that no amendment is necessary.

Regarding the claim that the CFTC is improperly grouping TFS-ICAP LLC and TFS-ICAP Ltd, the regulator notes in its Complaint, it alleges that, despite minimal legal formalities, the two entities operated as a single company. Brokerage desks in New York and London reported up through a singular management structure, the CFTC argues, adding that Jeremy Woolfenden supervised Emerging Markets brokers in both New York and London, reporting to a single CEO, Ian Dibb.

The regulator stresses that, where appropriate, the Complaint differentiates between New York and London broker misconduct, outlining particular allegations that New York and London brokers, respectively, engaged in violative acts. For instance, the Complaint contains separate and distinct allegations relating to the number of times the TFS alias was used (a proxy for flying prices) by each desk.

The CFTC also disagrees with the defendants’ claims “the Complaint fails to allege the specifics of the allegedly fraudulent misconduct of either LLC or Ltd.”

According to the regulator, the Complaint details company-wide deceptive practices-flying prices and printing trades-that were encouraged by the Global Head of Emerging Markets and condoned by the CEO. The Complaint specifies how prices were flown and approximates the number of times they were flown by each desk using a TFS alias over certain time frames. Furthermore, the CFTC notes that the Complaint explains how trades were printed and sets forth several examples, including details such as the date, the location of the broker, the currency pair and tenor, and the price. The Complaint also approximates how many times trades were printed on Volbroker in LATAM currency pairs.

The CFTC alleges that, from approximately 2008 through 2015, brokers at TFS-ICAP offices in the United States and the United Kingdom attempted to deceive and deceived their clients by engaging in the practices of communicating to them fake bids and offers and fake trades in the foreign exchange options market. The Complaint alleges that the practices, known as “flying prices” and “printing trades”, were a core part of TFS-ICAP’s broking business.

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