The US National Futures Association (NFA)‘s Business Conduct Committee has filed a complaint against the introducing broker Avail Trading Corp. operating as ATC Brokers and its chief David Manoukian. In the document the regulator accuses the broker of numerous violations of various NFA statutes.
The first accusation is that the company has failed to inform the regulator that it filed for bankruptcy earlier this year, following a $1.5 million civil suit from a customer. Later the bankruptcy filing was dismissed after ATC Broker settled the case with its client.
This complaint, however, is ATC’s least problem with the NFA. In the document the regulator is accusing the broker of falling below the minimum net capital requirements between January 25 and March 13 (the period in which the broker had been formally in bankruptcy) and failing to inform the NFA of this.
Worse still, the NFA examination that started in December 2015 found that the company’s front-end trading system was not processing the client orders on the first in first out (FIFO) principle and was working in such a manner that upon order liquidation was opening new positions and thus incurring additional fees for the customers. ATC brokers was also incurring additional fees and harming its clients by allowing them to hedge long and short position in the same currency pairs and charging them double fees. “This strategy provides little, if any, economic benefit to customers and, in fact, tends to produce built-in losses because of increased trading costs,” the NFA noted.
As a result of all those findings, the regulator is also accusing Avail Trading and David Manoukian of failing to supervise its employees and agents, to observe high standards of commercial honor and just and equitable principles of trade in the conduct of their forex business.
In its complaint, the NFA gives the company and Manoukian 30 days to respond to each allegation in written.
This is not the first time ATC brokers get in trouble with the NFA. Back in 2011 the regulator found out that Avail Trading and Jack Manoukian (brother of David), the other principal of the company, were practically trading against their customers.
Back then the broker did not inform its clients that the Forex Dealer Member (FDM) to which Avail Trading introduced their accounts used a software program that automatically offset their trades with opposing trades placed in an account solely owned by Jack Manoukian, and that such an arrangement created a conflict of interest. Thus Jack Manoukian and the company profited at the expense of its clients. Back then Manoukian settled the case and paid a $10 000 fine.
The NFA was established in the early 1980s as a self-regulatory organization of the US derivatives industry, including companies trading in on-exchange traded futures, forex and swaps. Membership in NFA mandatory. The goal of the organization is to ensure the companies doing business on the financial markets are adhering to high professional standards. The NFA membership is also mandatory for swap dealers and major swap participants.
Avail Trading Corp. is a member of the National Futures Association (NFA) and is a registered introducing broker with the Commodity Futures Trading Commission (CFTC). California-based ATC Brokers was set up in 2005, while its UK sister company was established and license by the Financial Conduct Authority (FCA) in 2014. The two brokers offer trading in forex. They both support the MT4 trading platform and its Trade Copier service. The US unit, however, also offers trading in futures via the ATC Trader, which is its own proprietary platform for futures trading.