In recent weeks, iForex has been brutally scrutinized following allegations that it breached consumer protection policies – but new claims against another reputable broker, FXCM (aka Forex Capital Markets), confirm that such malpractice can happen even among the largest brokers, and that it is for just these circumstances why trading with a regulated Forex broker is absolutely critical.
According to the NFA's website, the regulatory committee alleges that FXCM has imposed heavy fines on FXCM for denying positive slippage to clients since June 2008. The complaint includes a formal complaint against the company's CEO, Drew Niv, who the NFA claims failed to properly supervise his employees in this regard. FXCM was ordered to pay $2M to the NFA as a sanction, and to make a good faith effort to repay traders who have been wronged in the past years. The brokerage was also commanded to correct their existing procedures to avoid this type of error in the future.
In an official statement, FXCM officials estimate that their restitution payments to traders will be about $8M. Owing to funds set up to help cover these costs, and payments from partners for the same purpose, FXCM anticipates that these compensatory payments will not impact the net income of the company. The company also promises to contact all traders who are eligible for payments within 30 days.
FXCM is not the first Forex giant to face disapproval from the NFA. In July 2010, Gain Capital, the parent company of Forex.com faced similar allegations, culminating in a fine of over $400,000.
Despite the seemingly rising number of complaints against Forex brokers, traders need not be overly fearful of getting bilked by their broker. If you are trading with a regulated Forex broker, you can rest assured that you are getting the service that you registered for, and that if you aren't, regulatory agencies will continue working to ensure that you are trading under the conditions guaranteed by your brokerage.