CFTC starts legal action against retail FX broker Tallinex

Maria Nikolova

CFTC seeks permanent injunction, civil monetary penalties and other forms of relief for defendants.

Offering retail Forex services to US clients without having the necessary registration with the US regulators is a law violation and a broker may be prosecuted for it. The United States Commodity Futures Trading Commission (CFTC) has just demonstrated again that it will go after offenders over such law breaches.

On May 30, 2017, the CFTC filed a case against retail Forex broker Tallinex at the Utah District Court. The case captioned Commodity Futures Trading Commission v. Tallinex et al (2:17-cv-00483) is assigned to Judge David Nuffer. The official cause for the legal action is alleged violation of Federal Commodity Exchange Regulations.

The CFTC is seeking permanent injunction, civil monetary penalties and other forms of relief for defendants.

According to Law360, the US regulator alleges that Tallinex took at least $1.5 million from US investors by conducting retail foreign currency trades without having the necessary registration.

The CFTC says that from September 2012 and to at least September 2016, Tallinex solicited and accepted Forex orders from customers in the United States without registering as a retail foreign exchange dealer with the Commission. Thus, the broker is alleged of having violated the Commodity Exchange Act and agency rules.

Tallinex’s website displays a disclaimer saying that the company does not provide retail Forex services to US residents. The contact form shows the broker is registered in St Vincent and the Grenadines.

Under the Commodity Exchange Act (CEA) and US CFTC regulations, since October 18, 2010, an entity that solicits or accepts orders from US customers in connection with forex transactions must register with the CFTC and comply with rules and regulations, including (inter alia) minimum capital requirements and record-keeping. Putting it otherwise, even an overseas company that wants to target US residents should have the necessary registration with US regulators.

The CFTC has demonstrated several times how it can punish violators of this rule. For example, in February 2013, the CFTC filed a complaint in Court against Halifax Investment Services of Sydney, Australia for soliciting and accepting FX orders from US customers without registering with the CFTC as required.

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