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Fox Hunting: 14 Small firms Illegally Sold Foreign Currency Contracts

January 26, 2011

THIS is why new financial regulation was implemented and must remain to root out the foxes who invaded our financial system and used it illegally.

NY Times reports:

WASHINGTON (AP) — Federal regulators have filed suit against 14 small firms they say illegally sell foreign currency contracts to individuals because the firms aren’t registered with a government agency.

The lawsuits announced Wednesday were the first show of force by the Commodity Futures Trading Commission under new regulations that took effect in October under the financial overhaul law. The suits seek to force the firms to register with the CFTC before they can continue to operate. They also seek civil fines.

When an investor buys a foreign exchange contract, he buys the right to purchase an amount of foreign currency at a fixed price in dollars. Investors hope to profit from ups and downs in currency markets, but they can also suffer losses from sharp price swings.

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