The U.S. Commodity Futures Trading Commission (CFTC) has just issued an order which simultaneously settled charges against over a failure to comply with minimum financial requirements for Futures Commission Merchants (FCMs) and Retail Foreign Exchange Dealers (RFEDs) between the period of December 2010 and November 2012 (when it was registered as such), according to a copy of the commission’s press release.
GFT was acquired by , following the above mentioned relevant period when the CFTC determined that , and the order today imposes a $200,000 civil monetary penalty and a cease and desist order against GFT.
Gain Capital, which effectively owns the company, as mentioned above, since last year when , was not mentioned in the order, yet a footnote in the CFTC case document explained: “4 Subsequent to the relevant period, GFF was acquired by an unaffiliated entity (the “purchaser”). The purchaser and its affiliates, other than GFF, are not included in the application of the cease and desist order in this Order.”
The Adjusted Net Capital (ANC) is calculated for FCMs as equal to or in excess of the greatest of $1 Million or various other haircut measures. In addition, since during the relevant period GFT was an RFED, the same rules require that RFEDs maintain $20 million plus 5% of their total retail forex obligations in excess of $10 million at all times.
The press release described GFT’s ANC requirement as an RFED at roughly $24 million, however, during various separate months between the relevant period GFT was under capitalized by as much as $30 million at one point, based on its month-end ANC computations -according to the CFTC announcement.
The $200,000 penalty against GFT must be paid within ten days from today – the date on the CFTC order, according to the description in the filings. GFT had some of its registration statuses with the NFA withdrawn late last year around time of the acquisition – but those withdrawals were on hold by the regulator- pending a review . Gain Capital is listed as a principal and majority owner of GFT, according to public data on the NFA website. of GCAP are trading up roughly 1% today, hovering just under $8.00 per share mark on the NYSE.
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