Securities Law Updates | New Releases/No Action Letters
February 11, 2013
Australian Company Halifax Investment Services, Ltd. Sued for Unlawfully Soliciting U.S. Customers
CFTC v. Halifax Investment Services, Ltd.
CFTC Release No. pr6508-13Case: 1:13-cv-00892, U.S. District Court for the Northern District of Illinois, 2/5/2013
The U.S. Commodity Futures Trading Commission (CFTC) has filed a complaint in the U.S. District Court for the Northern District of Illinois against Halifax Investment Services, Ltd. (Halifax) of Sydney, Australia for soliciting and accepting foreign currency (forex) orders from U.S. customers without registering with the CFTC as required.
In the forex market, entities known as Retail Foreign Exchange Dealers (RFEDs) may buy foreign currency contracts from, or sell foreign currency contracts to, individual investors.
Under the Commodity Exchange Act (CEA) and CFTC regulations, since October 18, 2010, with a few exceptions, an entity acting as an RFED that solicits or accepts orders from U.S. customers in connection with forex transactions 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.
According to the CFTC complaint, Halifax acts as an RFED and knowingly solicits or accepts orders from non-eligible contract participants (non-ECPs) located in the U.S. without being registered with the CFTC as an RFED.
Among other things, the complaint states that Halifax operates a website that permits U.S. customers to open trading accounts by submitting online account applications, and that nothing in Halifax’s online account application states that Halifax does not accept U.S. customers or precludes non-ECPs from opening forex accounts with Halifax.
In its continuing litigation, the CFTC seeks a permanent injunction preventing Halifax from soliciting U.S. customers to buy or sell foreign currency contracts and from operating its website unless and until it complies with the CEA and CFTC regulations, as charged. The complaint also seeks civil monetary penalties, trading and registration bans, disgorgement, and rescission.
The CFTC strongly urges the public to check with the National Futures Association (NFA) whether a company is registered before investing funds. If a company is not registered, an investor should be wary of providing funds to that company.
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