Foreign-exchange brokerage FXCM Inc., which deals with retail investors, paid a fine to regulators due to complaints that it was cheating customers with respect to getting the best trade prices available. (See Wall Street Journal) The details of this settlement provide more evidence of how regulators are simply failing investors.
In the settlement, FXCM was not required to admit any wrongdoing and the benefit to investors will be about $17 per customer, i.e. less than the cost of popcorn and a movie at your local movie theatre. Although regulators are working on more safeguards for retail currency investors, as well as futures and stock investors, additional regulation will not solve the problem without aggressive policing and enforcement of existing or new regulations by the regulators.
The perils of investing with retail FX brokers are already significant, with only one in four investors make money. The additional hurdle of dealing with an unethical or incompetent brokerage firm ads to these risks.
-- Chris Vernon, founding partner of the Vernon Healy law firm