Foreign exchange broker fined £85K by FSA

FSA has Fined Forex Broker for Failing to Segregate Client Money

FSA has Fined Forex Broker for Failing to Segregate Client Money

Failure to ring-fence (isolate) client’s money from the firm’s own funds has cost foreign exchange broker ActivTrades Plc £85,750 in fines.

Imposing the fines FSA said that the company has failed to keep client’s money in separate accounts with trust status as required by law.

ActivTrades had held funds ranging between £3.4 million and £23.6 million, between April 2009 and September 2010. The company had held £12.2 million on an average during the period and failed to adequately segregate the firm’s money from client money, which could have led to losses of its clients had the company become insolvent.

During an audit known as FSA thematic review, the ActivTrades shortcomings were revealed. FSA then sought an expert report on the matter, which showed that the firm had mixed client money on multiple occasions.

Between January and June 2010, ActivTrades held €800,000 customer money in its own account, meaning they were exposed to the company’s business risks.

The expert report also found that the firm had failed to calculate client money correctly on several occasions and did not pay out accrued interest.

“It is essential for firms to adhere to our client money rules and our recent action in this area shows our continuing focus on the importance of managing and protecting client assets adequately”, said FSA director of small firms Linda Woodall.

“Ensuring the necessary client money safeguards are in place is a key element of consumer protection, and firms of all sizes must ensure that any client money they hold is properly segregated”, she added.

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