14 firms sued by agency for currency trading

WASHINGTON — Federal regulators have filed suit against 14 small firms that officials say are breaking the law by selling foreign-currency contracts to individuals without being 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 lawsuits seek to force the firms to register with the CFTC before they can continue to operate. They also seek civil fines and restitution.

When an investor buys a foreign-currency 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.

The CFTC urged the public Wednesday to check whether a firm is registered before investing money. If the firm isn't registered, people should be wary of investing with it, the agency said.

The CFTC and state regulators have previously warned the public to be cautious before trading foreign currencies in general – especially outside of major exchanges such as the Chicago Mercantile Exchange – saying it can be very risky.

The lawsuits announced Wednesday were filed in federal courts in Chicago, New York, Kansas City and Washington, D.C. The firms named were EuroForex Development LLC, FIG Solutions Limited Inc., ForInvest, FXOpen Investments Inc., FXPRICE, GIGFX LLC, InovaTrade Inc., InstaTrade Corp. doing business as InstaForex, InvesttechFX Technologies Inc., J&K Futures Inc., Kingdom Forex Trading and Futures Ltd., Prime Forex LLC, Wall Street Brokers LLC and ZtradeFX LLC.