Ms. XXX has lodged his complaint with Financial Commission on the following grounds:
The Client used trading account #XXXXX for trading operations on the Forex and CFD market. Having had little to no experience trading the markets, the Client used the services of an investment consultant (a representative of the broker XXXX).
At the time of the alleged incident described in the complaint the Client held open positions LONG and SHORT (including hedged positions) in several financial instruments:
-sum of SHORT position size on Aluminium equal to 1.40 contracts,
-sum of LONG position size on Aluminium equal to 1.40 contracts,
-NET position size on Aluminium equal to 0.00 contracts;
– sum of SHORT position size on Palladium equal to 0.50 contracts,
– sum of LONG position size on Palladium equal to 1.00 contracts,
– NET position size on Palladium equal to 0.50 contracts;
– sum of SHORT position size on Platinum equal to 0.50 contracts,
– sum of LONG position size on Platinum equal to 0.50 contracts,
– NET position size on Platinum equal to 0.00 contracts;
– sum of SHORT position size on Crude Oil equal to 0.50 contracts,
– sum of LONG position size on Crude Oil equal to 0.50 contracts,
– NET position size on Crude Oil equal to 0.00 contracts;
– sum of SHORT position size on USDRUB equal to 340000 of base currency,
– sum of LONG position size on USDRUB equal to 50000 of base currency,
– NET position size on USDRUB equal to 290000 of base currency;
– sum of LONG position size on Gold equal to 0.10 contracts;
-sum of SHORT position size on USDJPY equal to 20000 of base currency.
The incident occured on the Client’s account on November 30th, 2017 at 16:20 (trading server time). At this time a new SHORT position was established in the account on the USDRUB currency pair:
The opening of the order #1483737 led to the decrease in margin on the account to a critical level and, as a result led to the liquidation of all open positions on the account by the Broker (Stop Out).
The Client states that she believes her trading account deposit was lost due to the deliberate actions of the investment consultant. In supporting this conclusion the Client argues that the investment consultant: opened too many trades, did not employ simple rules of equity management, placed trades in products with high spreads, frequent use of hedging in trading. The Client is requesting the Broker to return funds in the amount of $16343 that were deposit in the trading account. The documentary evidence provided by the Client includes a trading account statement for account #XXXXXX, as well as audio recordings of conversations with a representative of Broker YYYYY.
The Broker believes the Client’s complaint is not justified and does not take any responsibility for the losses incurred on the Clients’ account, because, as stated by the Broker, the Client was made aware of all risks involved in trading leveraged products on the financial market. The appropriate risk disclosures were provided to the Client in electronic format during the account opening process.
Moreover, the Broker indicated that all trades conducted on the Client’s account were made either directly by the Client or by the investment consultant after receiving verbal confirmation from the Client.
Following the Dispute Resolution Committee’s decision in the case, the Broker did not satisfy the DRC’s decision to compensate the client within 28 days, according to the Rules and Guidelines of the Financial Commission.
Because the Broker failed to satisfy the decision, the Commission took emergency action to assist the Client and invoked the use of the Compensation Fund to compensate the Client for their losses identified in the DRC decision. As a result, the Client was awarded the maximum amount of $5000 from the Compensation Fund, as the Broker was a Category B member.
Furthermore, the Commission took action and expelled the Broker’s membership with the Financial Commission.
|Financial Commission Complaint
|Complaint Raising Date
|Complaint Filing Date
The decision for this complaint is based on the information provided by the Client and the Broker.
To ensure an objective investigation of the incident, the Dispute Resolution Committee (DRC) of the Financial Commission closely examined the documentary evidence provided by the parties to the dispute. Having analyzed the materials of the complaint, the Dispute Resolution Committee has come to the following conclusions:
7.1 The Company does not consult the Client on the benefits of any specific trade order or otherwise provide any other consulting regarding investments, and the Client agrees that the services do not include investment consultations on financial instruments, base markets or equity. The Client makes trading decisions exclusively of their own accord, including to place trading orders.
7.2 The Company is not required to provide any legal, tax or other advise associated with any trades. If the Client wishes, they can consult with an independent party on such matters before executing a trade.
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 XXXX. with license number YYYY, address in ZZZZ. XXXX does not establish accounts to residents or passport holders of certain jurisdictions including Canada and USA.
As such, having reviewed all the facts and circumstances of the dispute, the DRC has come to unanimous agreement that trades #XXXXX and ZZZZZZ) conducted on trading account #XXXXX should be deemed invalid and the results of these trades annulled. Given this determination, the Broker must compensate the Client for losses incurred with trades #XXXXX and #ZZZZZZ in the sum of $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.
|Ruled in Favor
|If you have any questions regarding this investigation, please send them to the following address [email protected]
|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.
Head of DRC
|March 6th 2017