The New York Attorney General and the Commodity Futures Trading Commission penalized BGC Financial LP and GFI Securities LLC to settle charges of alleged fraud in foreign exchange options markets.
The two BGC Partners Inc. units agreed to pay penalties totaling $12.5 million dollars to the New York Attorney General's Office and to pay an additional $12.5 million in penalties to the CFTC.
The New York Attorney General said, as set forth in separate agreements with BGC Financial and GFI Securities, its investigation uncovered the posting of fake trades, bids and offers by brokers of foreign exchange options to ramp up interest from New York traders in largely illiquid emerging market currencies.
The CFTC found that BGC Financial and GFI Securities brokers intended to create an illusion of greater liquidity by posting bids and offers on their company's electronic platform for emerging markets foreign exchange options when no trading institution had bid or offered the option at that level, and by communicating fake trades to their respective clients.
The CFTC required each of BGC Financial and GFI Securities to strengthen their internal controls and procedures, to provide for the appointment of a monitor and to cease and desist from violating the Commodity Exchange Act and CFTC regulations, as charged.
