The US Commodity Futures Trading Commission (CFTC) said on Wednesday it has obtained a Consent Order from the District Court for the Western District of Texas against forex brokerage IB Capital FX (aka IB Capital FX (NZ)) which operates as IB Capital, and its controllers Michel Geurkink, and Emad Echadi, under which they have to pay a combined fine of $35.42 million for providing financial services in the US without being authorized.
The company and its controllers have to pay $35 million in restitution to defrauded customers and a $420,000 civil monetary penalty.
The CFTC has found IB Capital acted as brokers of off-exchange margined retail forex trading. It has solicited some $51.6 million from approximately 1,850 customers both in the US and outside, but has failed to register with the US regulator, as required.
In the January-September 2012 period, traders with IB Capital received a portion of the $51.6 million sum in the form of redemptions, refunds, and other payments. As a result, IB Capital and its controllers had for themselves $35 million, which was the gain received in connection with their failure to register as required under the Commodity Exchange Act (CEA).
The federal court order also imposed permanent trading and registration bans on the brokers, prohibiting them from further violating the local regulation.
The CFTC filed with the federal court an enforcement action against the defendants on 9 November, 2015. At the time, it became clear the case was related to another forex trade scheme that took place in 2012. Back then, the CFTC opened a filing against another forex broker, Australia’s Investment Intelligence Corporation (IIC), and its principal Senen Pousa, for providing trading services in the country illegally and soliciting clients, including US citizens, to open margined retail forex leveraged trading accounts at IB Capital. IIC acted as an introducing broker to IB Capital. In 2013, the US Court required Pousa and IIC to pay $33,299,821 in total to customers, and $79,500,000 in civil monetary penalty, and ordering permanent trading and registration bans.
In addition, IB Capital is New Zealand-registered, and Geurkink and Echadi are citizens of the Netherlands. In fact, the two individuals are being criminally prosecuted in their home country for alleged fraudulent activities arising from the operations of IB Capital.
For these reasons, for this case the CFTC has collaborated with several other regulatory bodies, including in the Netherlands, the UK, Hungary, Australia, and New Zealand.
When engaging with unauthorized and non-regulated brokers, traders are putting their investments at higher risk. We strongly advise you to only deal with regulated forex brokers, authorized by reputable regulatory bodies like CySec, FCA, and CFTC/NFA, among others.