The US Commodity Futures Trading Commission (CFTC) has fined Florida-based Southwest Group for acting as a retail foreign exchange dealer without having the regulatory approval for doing so. The regulator has filed and settled enforcement actions against operators of this trading venture, requiring them to cease and desist from further violations, and to disgorge $75,000 in a civil monetary penalty.
The settlement also resolves CFTC probes, which found Southwest Group was engaged in this fraudulent activity that targeted customers throughout the United States. The agency said the company offered leveraged FX trading to US investors who were not qualified to engage in such off-exchange transactions. The order further finds that forex transactions involved Vietnamese Dong or Iraqi Dinar.
The regulator also pointed out the timeframe of the alleged crimes, which spanned almost five months, from April 2018 through September 2018.
According to a statement posted on the CFTC’s website, Southwest Group enticed customers to participate in the scheme utilizing its so-called “Premium + Layaway Program” financing option. The company acted as the counterparty to retail forex transactions. But rather than settling customers’ trades within two days, it took 30 or 45 days to get their money back, the CFTC said.
“The CFTC strongly urges the public to verify a company’s registration with the CFTC before committing funds. If unregistered, a customer should be wary of providing funds to that company. A company’s registration status can be found using NFA BASIC,” the watchdog said.
The CFTC has been active recently as US regulators continue their cleanup of the forex space, this time with charges of fraud being brought against a dozen of brokers and trading apps. Just last month, the agency has filed its case against Silver Star FX and its COO, asserting that David Wayne Mayer was only interested in running a fraudulent scheme.