Gain Capital aka forex.com fined 459k

pboyles · Jan 5, 2011

I just came across this case about Gain Capital also known as forex.com. At the risk of receiving a lot of abuse from the forex experts I have to say that I think this proves what goes on behind the scenes and how slippage in particular is managed in favour of the brokers. All these excuses about 'market volatility' seems to be just nonsense. The manipulation of the margin requirements makes good reading too.

The interesting documents can be found from the links on this summary page (complaint and decision).

http://www.nfa.futures.org/news/newsRel.asp?ArticleID=3676

scose-no-doubt · Jan 5, 2011

Brilliant.

Wish there were more investigations like the investigation into Gain Capital the world over.

pboyles · Jan 5, 2011

scose-no-doubt said:
Brilliant.

Wish there was more investigation into the rest of them the world over.

It seems they were audited but there were also complaints from customers. It just goes to show that complaints are investigated, at least some of the time. I dont know if the fine is enough to discourage them given their turnover but it will certainly make people sit up and realise whats going on with these firms.

scose-no-doubt · Jan 5, 2011

Yes, but you have to wonder if Gain Capital turnover will drop as a result of the case. Also I'm sure if Gain Capital continue with their dodgy practices any complaints will be taken more seriously. Probably give them a larger fine if it happens again.

pboyles · Jan 5, 2011

scose-no-doubt said:
Yes, but you have to wonder if their turnover will drop as a result of the case. Also I'm sure if they continue with their dodgy practices any complaints will be taken more seriously. Probably give them a larger fine if it happens again.

You'd think it would affect them, I'm just not so sure a lot of people check before opening retail forex accounts. It seems all they ever want to know is 'how much can I make trading FX'.

scose-no-doubt · Jan 5, 2011

Lets get this thread up in the google rankings then

On Sharkeys pound of course.

wackypete2 · Jan 5, 2011

The US has been doing a decent job of ferreting out the most abusive brokers. The cost of that is over regulation but I guess you can't have everything.

Peter

pboyles · Jan 5, 2011

wackypete2 said:
The US has been doing a decent job of ferreting out the most abusive brokers. The cost of that is over regulation but I guess you can't have everything.

Peter

I think it goes some way to explaining why there is so much opposition in the industry to more regulation, a lot of companies are probably making money dishonestly so more regulation is not good for them. If every forex company was audited and investigated like happened here I wonder how many of them would come up clean?

pboyles · Jan 5, 2011

I see the Virtual Dealer Plug-in mentioned in the complaint has been discussed on T2W before. It seems the concern expressed then was well placed.

http://www.trade2win.com/boards/forex-first-steps/55432-mt4-broker-plugin-platform-scam.html

pboyles · Jan 6, 2011

Seems there may be compensation available if the changing margin requirements caused you a loss

anley · Jan 6, 2011

A friend of mine is the head of FX at a medium sized bank and he's always going on about how the global FX market is one big cesspit, and that's the big stuff/big boys.

But that part of the industry smells of roses compared to the retail market.

My advice, use someone like InterActiveBrokers. They might not be cheap (not expensive either) but at least you're guaranteed a much better deal than with a bucket shop. And remember, a bucket shop doesn't always mean a small firm. Some now are big money sponsors, one in the Premiership for example.

wackypete2 · Feb 6, 2011

I used forex.com a few years back before they offered a metatrader platform. They had their own platform, ForexTrader, I think it was called. I got requoted up the wazoo or got an "off quotes" message and finally gave up. And this was during the normal course of the day.

Peter

t2wfx · Feb 18, 2011

Wow. Better stay away from this broker than....

traderman1 · Feb 18, 2011

pboyles said:
I just came across this case about Gain Capital also known as forex.com. At the risk of receiving a lot of abuse from the forex experts I have to say that I think this proves what goes on behind the scenes and how slippage in particular is managed in favour of the brokers. All these excuses about 'market volatility' seems to be just nonsense. The manipulation of the margin requirements makes good reading too.

The interesting documents can be found from the links on this summary page (complaint and decision).

http://www.nfa.futures.org/news/newsRel.asp?ArticleID=3676

Some interesting facts from the report:

Gain engaged in abusive margin, liquidation and price slippage practices that benefited Gain to the detriment of its customers.
The Court ordered a $459,000 monetary sanction against New Jersey forex firm Gain Capital Group

In 2009, Gain earned over $150 million in gross revenue from its forex activities and net income of about $42.5 million. As of May 31, 2009, Gain had roughly 60,000 retail customers - approximately 34,000 of whom were U.S. retail
customers - with total equity of approximately $136 million.

The Fine of $459,000 is only 1% of its $42.5 million net profit for 2009 and only 0.3% of gross revenue for 2009 Hardly a serious punishment.
And how many years have they been engaged in these abusive practices?

They were also fined $100,000 back in 2006.

anley · Feb 18, 2011

traderman1 said:
Some interesting facts from the report:

Gain engaged in abusive margin, liquidation and price slippage practices that benefited Gain to the detriment of its customers.
The Court ordered a $459,000 monetary sanction against New Jersey forex firm Gain Capital Group

In 2009, Gain earned over $150 million in gross revenue from its forex activities and net income of about $42.5 million. As of May 31, 2009, Gain had roughly 60,000 retail customers - approximately 34,000 of whom were U.S. retail
customers - with total equity of approximately $136 million.

The Fine of $459,000 is only 1% of its $42.5 million net profit for 2009 and only 0.3% of gross revenue for 2009 Hardly a serious punishment.
And how many years have they been engaged in these abusive practices?

They were also fined $100,000 back in 2006.

I wonder if the above is what they won their 'Awards' for.

Folks, I hope you've all realised by now that 'award winning' these days means nothing, 98% of the time it's a marketing gimmick unless it's actually something worth talking about like as Oscar (but even those I suspect will now have been infiltrated by money).

Gain Capital aka forex.com fined 459k

pboyles

Legendary member

scose-no-doubt

Veteren member

pboyles

Legendary member

scose-no-doubt

Veteren member

pboyles

Legendary member

scose-no-doubt

Veteren member

wackypete2

Legendary member

pboyles

Legendary member

pboyles

Legendary member

pboyles

Legendary member

anley

Senior member

wackypete2

Legendary member

t2wfx

Active member

traderman1

Active member

anley

Senior member

Similar threads