NFA imposes $700,000 fine on GAIN Capital
The National Futures Association (NFA) has ordered GAIN Capital Group LLC to pay a $700,000 fine.
The Decision, issued by NFA’s Business Conduct Committee (BCC), is based on a Complaint issued by the BCC and a settlement offer submitted by Gain and Alexander Robert Bobinski, Jr., an associated person and principal of the firm and Associate Member of NFA.
In the settlement offer, the firm and Bobinski neither admitted nor denied the allegations in the Complaint.
In its Decision, the BCC found that Gain violated NFA Compliance Rule 2-43(a)(1) by improperly adjusting customer accounts, following a system malfunction; violated NFA Compliance Rule 2-36(c) by its treatment of customers affected by the system malfunction and Gain’s account adjustments; violated NFA Compliance Rules 2-5 and 2-36(c) by submitting inaccurate and incomplete information to NFA; and violated NFA Compliance Rules 2-36(e) and 2-9(a) by failing to supervise.
The BCC also found that Bobinski violated NFA Compliance Rule 2-36(e) by failing to supervise.
Count I of the Complaint charged Gain with improperly adjusting customer accounts, in apparent violation of NFA Compliance Rule 2-43(a)(1).
From about 2:55pm on March 31, 2021 to about 1:00 am on April 1, 2021, GAIN experienced a malfunction on its FOREX.com trading platform, in which customers were able to execute stop and limit orders in 14 currency pairs at prices that did not reflect the current prices being published by the firm on its platform.
By the time GAIN had stopped the system malfunction, the firm had incurred about $3 million in losses on executed customer orders. GAIN negatively adjusted the accounts of 17 customers by approximately $2.84 million. It positively adjusted the accounts of 33 customers by approximately $35,000.
GAIN’s CEO Bobinski personally approved the adjustments.
Count II of the Complaint charged Gain with failing to observe high standards of commercial honor and just and equitable principles of trade by unfair treatment of customers affected by a system malfunction and Gain’s account adjustments, in apparent violation of NFA Compliance Rule 2-36(c).
Count III of the Complaint charged Gain and Bobinski with failing to cooperate and failing to observe high standards of commercial honor and just and equitable principles of trade by repeatedly submitting inaccurate and incomplete information to NFA, in apparent violation of NFA Compliance Rules 2-5 and 2-36(c).
Count IV of the Complaint charged Gain with failing to supervise, in apparent violation of NFA Compliance Rules 2-9(a) and 2-36(e); and charged Bobinski with failing to supervise, in violation of NFA Compliance Rule 2-36(e).
GAIN Capital was sold to StoneX back in the summer of 2020.