FXCM UK fined 4 mln stg for witholding client profits
LONDON Feb 26 (Reuters) - Britain's financial watchdog said on Wednesday it had fined foreign exchange trading firm FXCM's UK subsidiaries 4 million pounds ($6.7 million) for withholding profits from clients between 2006 and 2010.
The Financial Conduct Authority (FCA) said that FXCM kept around 6 million pounds in profits made on favourable market movements between the time customers placed orders with FXCM UK and the moment they were executed by another part of the group. By contrast, any losses were passed to clients in full.
FXCM UK also breached FCA rules by failing to inform the regulator that U.S. authorities were investigating another part of the group for the same behaviour, the watchdog said.
FXCM's UK clients will be fully compensated, with credit automatically paid into their accounts, it added.
"We expect all firms to put customers at the heart of their business, and we have taken action to ensure clients of FXCM UK will get redress," said Tracey McDermott, the FCA's director of enforcement and financial crime.
FXCM said in a statement it had already put aside $15 million to cover the settlement and related expenses and plans hold back another $1.9 million.
It had also changed its execution system so that customers can benefit from price improvement, Brendan Callan, FXCM UK's Chief Executive Officer said.
The settlement comes at a time of close scrutiny for the foreign exchange market, with global investigations into allegations that a handful of senior forex traders exchanged market-sensitive information and colluded to manipulate benchmark currency rates.
The FCA, the U.S. Department of Justice and the Financial Stability Board, which coordinates regulation for the Group of 20 leading economies, are among those looking into the claims.