For months now, the US regulator CFTC has been having issues with unregistered retail forex company JAFX, LTD. In fact, the regulator secured an Order of Permanent Injunction and Other Statutory and Equitable Relief against the firm over five months ago. After a long standstill, it appears that the case will finally see progress. In addition to that, the Utah District Court’s Magistrate Judge, Dustin B. Pead, ordered that the regulator and the company meet and negotiate.
The order was issued only two days ago, on July 1st. According to the Judge, it is necessary, so that the case would achieve a fast, just, and inexpensive determination of the action. The CFTC was tasked with producing and proposing a schedule to the defendants in the form of a draft Attorney Planning Meeting Report. Also, they must propose one within 14 days, starting from the date when the order was issued.
After that, the parties are to meet within 28 days from the moment the order was issued. According to the order, when the parties meet, they will have to file a jointly signed Attorney Planning Meeting Report. Not only that, but they will also have to email a stipulated Proposed Scheduling Order. They will have to address numerous concerns, questions, and issues that will be crucial in bringing the dispute to an end.
What exactly did JAFX do?
The case against JAFX started back in July 2018, when the CFTC decided to launch an action against the company. According to the regulator, JAFX was operating from the Grenadines, St. Vincent, and even Bulgaria. This comes as a violation of the Commodity Exchange Act, as well as Commission’s own regulations. As a result, the Commission was after injunctive and other equitable relief, but also after imposition of civil penalties. Simply put, they saw JAFX as an unregistered foreign exchange dealer.
The case kept advancing slowly, often near total standstill. Then, back in February, JAFX hoped to reach a partial settlement. The company was active at least from September 2015. It operated its own website, it posted videos on YouTube, and it offered to act as a counterparty to leveraged, retail forex transactions for US customers. This comes as a surprise, as their website’s language appears to note that their services are not directed at US customers.
In addition to that, their online account application is completely open to US customers, with no indication that they cannot or should not apply. Naturally, US customers were also not prevented from creating accounts. In fact, there is a drop-down menu that lists companies whose customers JAFX will accept, and the country sitting at the top of the list is the US itself. Opening the account will only cost around $100.
That is not the end of the issue, as the company also failed to provide customers with a Risk Disclosure Statement, nor has it advised customers. It did not disclose that it is not registered, nor that it is operating unlawfully. Also, its FAQ suggests that it is fully aware of the fact that it operates unlawfully, as it admits to not being regulated.
Now, CFTC demands that JAFX pays disgorgement, as well as post-judgment interest. Further, it is permanently restrained, enjoined, and prohibited from trading, or opening retail Forex trading accounts.