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Foreign Exchange

NFA clamps down on more dodgy dealers

It’s been another busy week for US regulator the National Futures Association, which has taken emergency enforcement action against several retail platforms, including One World Capital Group and Forex Liquidity, see the links on the NFA homepage (www.nfa.futures.org).

The NFA says its investigation into One World was prompted by complaints it had received from its clients that they were having difficulty withdrawing funds. The move follows on from action in November when the NFA ordered One World to pay a fine of $100,000, on or before December 31 2007, and an additional fine of $50,000, on or before February 1, 2008, after it was found that the company had failed to meet minimum adjusted net capital requirements and to maintain current books and records. It also found that One World used deficient promotional material and failed to adopt and enforce written procedures to supervise the use of their promotional material.

The Forex Liquidity case looks even more alarming. The company had claimed that its assets had a market value of approximately $41 million. Most of this was made up of a bond issued by ABN Amro. However, on examination, the NFA discovered that Forex Liquidity was not as liquid as it was proclaiming, because it did not actually “exercise sufficient control over the bond”.

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