A complaint has been filed by the NFA against the IKON Global Markets and its CCO Diwakar Jagannath too, as it failed to cooperate with the 2012 audit completed by the regulator. This complaint comes at a time, when the UK based subsidiary of IKON, is in process of withdrawing completely from US. IKON was previously licensed as a forex dealer and in 2010, it was charged for using asymmetrical price slippage settings on the forex trading platform. The case was however settled with the NFA, as IKON decided to pay a fine of $320,000 and customers were also refunded slippage amounts. The broker then made a decision to exit US as a forex broker, however, held onto the FCM license until this year.
Later, NFA decided to conduct a 2012 audit of IKON and the current complaint is based on that. According to the statement released by the NFA, IKON has failed to cooperate and produce some records which were important while the audit was being conducted. In the initial audit in 2012, the NFA discovered that IKON has not been able to calculate the Adjusted Net Capital correctly. The company included the haircut charge on all the open forex call positions and this had caused a reduction of $3.3 million in the Adjusted Net Capital. It was also found that one of the major affiliates of IKON, Quasar FX had not reported the margin properly. The audit also revealed that the AML policies of IKON were sort of lacking.
In the complaint launched by the NFA, it was mentioned that the most serious deficiency from IKON’s part was the company’s failure to provide records of in relation to the several foreign affiliates such as IKON Finance, IFSCL, Quasar FX and IKON Capital. It was also found that many of the affiliates shared common shareholders apart from unusual trading activities, deposits & withdrawals. It has been mentioned that IKON created a Spot Gold Futures contract which was traded on the NASDAQ OMX with IKON being the sole market maker. This product was traded by a single customer only – Quasar FX, indicating that wash trading was taking place.
In response to these findings, the NFA requested additional records such as bank and trading statements. IKON failed to provide the same and informed that the broker will be closing the FCM business.