Complaint Matter

Mr. XXX has lodged his complaint with Financial Commission on the following grounds:

The Client used trading account #XXXXX for trading operations on Forex and CFD market. Having no sufficient knowledge and experience of working on the financial market, the Client used the services of an investment consultant (Broker’s employee).

By the time of the incident several long and short positions (including locked positions) were opened on several financial instruments on the Client’s trading account:

– the total volume of short positions on Aluminum – 1.40 contracts,

– the total volume of long positions on Aluminum – 1.40 contracts,

– the volume of joint position on Aluminum – 0.00 contracts;

– the total volume of short positions on Palladium – 0.50 contracts,

– the total volume of long positions on Palladium – 1.00 contracts,

– the volume of joint long position on Palladium – 0.50 contracts;

– the total volume of short positions on Platinum – 0.50 contracts,

– the total volume of long positions on Platinum – 0.50 contracts,

– the volume of joint position on Platinum – 0.00 contracts;

– the total volume of short positions on Crude Oil – 0.50 contracts,

– the total volume of long positions on Crude Oil – 0.50 contracts,

– the volume of joint position on Crude Oil – 0.00 contracts;

– the total volume of short positions on USDRUB – 340000 units of currency,

– the total volume of long positions on USDRUB – 50,000 units of base currency,

– the volume of joint short position on USDRUB – 290000 units of base currency;

– the total volume of long positions on Gold – 0.10 contracts;

– the total volume of short positions on USDJPY – 20,000 units of base currency.

The incident on the Client’s account occurred on November 30, 2016, at 16:20 (server time). At the specified time new short position on USDRUB instrument was opened on the Client’s account:

Ticket       Open Time             Type  Volume Item      Price        S / L   T / P   Close Time              Price       Swap   Profit

XXXXXX  30.11.2016 16:20   sell    3.00      usdrub  63.4520  0.00   0.00   30.11.2016 16:20  65.4491  0.00   -9 154.14

The opening of the order # XXXXX led to a drop in margin level on the account below critical causing all Client’s opened positions to be forcibly liquidated by Stopout.

The Client claims that his deposit was lost due to deliberate actions was taken by the investment consultant. In support of his words, the Client cites the following arguments: an excessive number of opened positions, violation of elementary rules of fund management, trading instruments with a large spread, frequent use of position locking. The Client requires Broker to return his funds deposited to the trading account ($ 16,343). In support of his position, the Client provided account trading report, as well as audio recordings of telephone conversations with representatives of the Broker.

The Broker, in turn, does not see any grounds for the Client’s complaint and completely evades its responsibility for Client’s losses, as the Client was acquainted with all risks connected with trading on Forex market. Risk notification was presented to the Client in electronic form when opening a trading account.

In addition, according to the Broker, all transactions on the Client’s trading account were carried out either by the Client himself or by an investment consultant after receiving Client’s voice confirmations.

Complainant Broker
XXX YYY
Financial Commission Complaint #ZZZ
Complaint Raising Date Complaint Filing Date
30/11/2016 11/01/2017
Complaint Response:

The decision for this complaint is based on the information provided by the Client and the Broker.

With the aim to investigate the incident, Dispute Resolution Committee of the Financial Commission closely examined documentary evidence provided by the parties to the dispute. Having analyzed the materials of the complaint, the Dispute Resolution Committee concluded:

  1. As regards financial losses incurred by the Client in a series of transactions made under the guidance of an investment consultant, it should be noted that the Client should have realized the consequences and fully accept all the risks connected with any trading strategies offered by the consultant :
  • According to clause 7 of Client Agreement:

7.1.The Company will not advise the Client about the merits of a particular Order or give him any form of investment advice and the Client acknowledges that the Services do not include the provision of investment advice in Financial Instruments or the Underlying Markets or Assets.The Client alone will decide how to handle his Client Account and place Orders and take relevant decisions based on his own judgment.

7.2. The Company will not be under any duty to provide the Client with any legal, tax or other advice relating to any Transaction. The Client may wish to seek independent advice before entering into a Transaction.

  • The Client filled in the Customer Questionnaire, during the completion of this Questionnaire the Client should have assessed his financial capabilities. The Client also read and accepted Terms of Cooperation with the Company, which states: “The client will decide on his own how to act with his account, place orders and make appropriate decisions based on his own judgment. “
  • The company duly warns its customers about the risks connected with working in over-the-counter markets, including risk warning on the company’s website and in the electronic messages sent to the company’s clients:

Risk Warning: Trading leveraged products such as CFD’s involves substantial risk of loss and may not be suitable for all investors. Trading such products is risky and you may lose all of your invested capital. Please click here to read full Risk Disclosure. Safekeeping and Brokerage services are provided by Company with license number XXX/YYY, address ZZZ. The Broker does not establish accounts to residents or passport holders of certain jurisdictions including Canada and USA.

  1. It is also necessary to note that the Client does not deny the existence of voice orders, which he gave to the investment consultant, as evidenced by the audio recordings of telephone conversations provided by the Client.
  1. Nevertheless, there is one fact that indicates the responsibility of the Broker for Client’s partial losses. In particular, the Broker in response to Dispute Resolution Committee request did not provide any comments on the transaction # XXXXX, which was executed at non-market price according to the trade report provided by the Broker. This fact calls into question the correctness of execution of the transaction # XXXXX and all subsequent transactions that took place on the Client’s account.
  1. In response to Dispute Resolution Committee request, the Broker also did not provide documentary evidence related to the above-mentioned disputed transactions (the trading server log-files and the history of tick data on USDRUB instrument).

Thus, based on the above information, the members of Dispute Resolution Committee of the Financial Commission came to the unanimous opinion that the financial results of transactions # XXXX and # YYYY should be recognized as incorrect and the transactions themselves canceled. The broker must compensate for the Customer’s losses in full ($ 9233.90).

This complaint was reviewed by the members of the Dispute Resolution Committee of the Financial Commission and was processed by the Head of the Committee Anatoly Bulanov.

Ruled in Favor Compensation
Client $ 9233.90
If you have any questions regarding this investigation, please send them to the following address info@financialcommission.org
Acknowledgement
I certify that all information was considered by the Dispute Resolution Committee of the Financial Commission and hereby confirm that the decision was made fairly, impartially and without interference. I am confident that the information provided in the document is true.
Signature Designation Date
 Anatoly Bulanov

Head of DRC

6/03/2017