The US Commodity Futures Trading Commission (CFTC) today updated its caution list, the ‘RED List,’ in which it warns the public against unauthorized FX and that are illegally conducting financial services targeting the country’s residents.
The CFTC added 20 new names to the list, bringing the total number of backlisted entities to 168.
The CFTC has been active recently in its cleanup of the forex space with charges being brought against a dozen of brokers and trading apps. Just last week, the agency hit with a $500,000 fine for failing to adhere to certain regulations, including that it failed to meet minimum .
Earlier in June, Gain Capital UK was ordered to pay a civil penalty of $250,000 over allegations it signed up US investors to its FX trading platform. It has also agreed to disgorge $241,671, as well as to “cease and desist” from any futures breaches.
Today’s warning is also another action within the US regulators’ crackdown on after a series of cases uncovered massive fraud in the shady industry.
The RED list
Short for ‘Registration Deficient List,’ the RED list follows the example of other regulators abroad, such as the AMF (Autorité des marchés financiers) in France, which allows investors to identify unregistered foreign entities that may be engaged in illegal practices.
The US regulator’s list includes forex and that appear to be soliciting and/or accepting funds from US residents without having obtained CFTC registration, providing more protection and transparency for investors.
According to the CFTC, many of these foreign entities are acting in a capacity requiring them to be registered with the CFTC. Registration allows the agency to provide greater security and oversight of the industry by examining whether firms meet minimum financial standards as well as disclosure, reporting, and recordkeeping requirements.
However, the press release emphasized that registration is no guarantee against fraud or mismanagement by an unethical firm, although it does help bring a higher level of security and accountability to the industry.
The following brands have been added to the RED List:
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