Gain Capital Group LLC, a retail foreign exchange dealer, a forex dealer member and futures commission merchant, agreed to pay a fine of US $50,000 to resolve charges brought by the National Futures Association that it failed timely to assess the widespread impact of a possible execution system malfunction and make appropriate adjustments to harmed customers after it first learned of the malfunction. According to NFA, beginning in June 2017, a few customers detected execution errors in their account, complained to GCG, and in response GCG provided adjustments. However, said NFA, GCG did not timely take steps to assess the extent of the malfunction of the execution platform that caused the errors. Ultimately, acknowledged NFA, GCG conducted a broader inquiry and made adjustments totaling US $167,000 to all adversely impacted customers; it did not seek refunds from positively impacted customers. GCG determined that over 7,400 of its customers were affected by the malfunction which occurred from April 2016 through August 2017. In addition to paying a fine, GCG agreed to undertakings set forth in an unpublished side letter in order to resolve the NFA’s charges; GCG did not admit or deny any of NFA’s allegation. GCG was charged with violating an NFA rule that requires forex dealer members to favorably adjust all customers harmed by circumstances beyond their control unrelated to market price movements. (Click here to access NFA Rule 2-43(a)(1)(i).)
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Forex Dealer Member Sanctioned by NFA for Failing Timely to Adjust Customers Hurt by Ongoing Trading Platform Malfunction
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