The most notable forex broker scam of the year was perpetrated by the former largest forex broker in the US, FXCM. Earlier this year, the NFA and CFTC banned FXCM from operating in the US and further charged them a $7 million fine. Now, the company has been renamed to Global Brokerage and the settlement dictates that the company never again apply for registration with the CFTC.
According to the charges by the NFA, FXCM was ‘engaging in fraudulent activities’ against its retail forex traders. On their website, they would claim to be running a true ECN execution model where trades are executed directly in the interbank market. Instead, they were actually a dealing desk. Clients’ trades would be routed to Effex Capital LLC, which was supposed to be an independent market maker but was actually an arm of FXCM. Effex Capital would then take aggressive trades against the clients so that they would lose, and in return, FXCM would receive kickbacks under the table from Effex Capital.