ZuluTrade, one of the first social trading platforms for forex, had its membership in the US National Futures Association (NFA) suspended and is exiting the US forex market, shows a publication on the NFA website.
According to the NFA, ZuluTrade and its owner Leon Yohai Giochais have also reached a settlement with the NFA’s Business Conduct Committee (BCC) to pay a fine of $30 000 each. The penalty is imposed on ZuluTrade for failing to maintain minimum net capital, to implement the firm’s AML program and to adequately supervise its employees, agents and operations. The Complaint charged Giochais with failing to adequately supervise the firm’s employees, agents and operations.
The fine is payable if Giochais or ZuluTrade apply for NFA membership again. Until it is paid, the NFA shall not take any further action on the application.
The documents show that the settlement decision was taken on September 30 and the ruling comes in effect on October 17.
ZuluTrade and Giochais got in trouble with the NFA this spring, when the body overseeing the forex and introducing brokers in the US filed a complaint against the company and claimed they have failed to comply with NFA requirements as an introducing broker and is subject of disciplinary proceedings for violations.
Worse still, according to the NFA, ZuluTrade has failed to comply with the minimum capital requirements. This was caused by fines totaling $180 564 imposed by the Office of Foreign Assets Control (OFAC) and the U.S. Commodity Futures Trading Commission (CFTC) that in the end of 2014 remained outstanding. To compensate for the capital shortage, ZuluTrade received capital contributions from two of its affiliates, but they were improperly reported as current assets at a date before the actual contributions were made. Furthermore, ZuluTrade has failed to inform both the CFTC and the NFA of its capital being below the requirement between September 29, 2014 and February 2, 2015. ZuluTrade has also failed to properly report other assets and liabilities.
NFA also claimed ZuluTrade has failed to comply with US money laundering regulations, customer identification requirements and did not perform monthly reviews of the compliance with the capital requirements.