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

Australian Company Halifax Investment Services, Ltd. Sued for Unlawfully Soliciting U.S. Customers

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.

View a PDF of the release

Also See:

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Interpretive Guidance on Municipal Advisor Registration Rules Now Out

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Companies Mentioned

Securities Law

The following companies are mentioned in Securities Law Updates:

Securities and Exchange Commission

Harris Associates, L.P.

Banc of America Securities LLC

Citicorp USA, Inc.

CIBC World Markets Corp.

Citigroup Inc.

Barclays Capital Inc.

Citigroup Global Markets, Inc.

The Public Employees’ Retirement System of Mississippi

Morgan Stanley & Co., Inc.

Jan Charles Finance S.A.

Park East, Inc.

City of Philadelphia Board of Pensions and Retirement

Staples, Inc.

The Bank of New York Company, Inc.

CIBC, Inc.

Citibank, N.A.

Metal Management, Inc.

European Metal Recycling, Ltd.

Salomon Smith Barney Inc. n.k.a. Citigroup Global Markets, Inc.

Calyon Securities (USA), Inc. f.k.a. Credit Lyonnais Securities (USA) Inc.

Calyon New York Branch (successor by operation of law to Credit Lyonnais New York Branch)

Salomon Smith Barney, Inc.

JPMorgan Chase & Co.

Dynex Capital Inc.

Citigroup, Inc.

JPMorgan Securities Inc.

Merit Securities Corp.

Scotia Capital (USA), Inc.,

Teamsters Local 445 Freight Division Pension Fund

Aetna, Inc.

Cowen & Co., LLC f.k.a. SG Cowen Securities Corp.

Societe Generale

SunTrust Bank

TD Securities (USA), Inc.

BMO Nesbitt Burns Corp. n.k.a. Harris Nesbitt Burns Corp.

Buchanan Ingersoll & Rooney Professional Corporation

Consolidated Leasing Hugoton Joint Venture #2

W. R. Huff Asset Management Co., LLC

Consolidated Leasing Anadarko Joint Venture


Guardian Capital Management

Free Enterprise Fund

Banc of America, N.A.

Vesta Insurance Group, Inc.

Beckstead and Watts, LLP

Barclays Bank PLC

Torchmark Corp.

Public Company Accounting Oversight Board

BNY Capital Markets, Inc.

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