The folks at Law360 have done a good work by uncovering this story. Unfortunately I wasn't able to get ahold of the court documents myself so I'll bring a short excerpt from Law360's story below.
If this wasn't sad it would have been quite funny...
Futures commission merchant Ikon Global Markets Inc. has sued the U.S. Commodity Futures Trading Commission for allegedly failing to enforce a ban on hedged customer transactions and even faulting firms that abide by the new Regulation . The complaint, filed Monday in the U.S. District Court for the District of Columbia, claims the CFTC’s self-regulatory arm, the National Futures Association, has punished Ikon for complying with Wall Street reforms and prohibiting customers from simultaneously taking short and long positions on the same currency transaction.
For roughly two years Ikon has not only been barred by NFA and CFTC regulations from allowing its retail customers to maintain matched positions but also been required to close out such wasteful positions in customers’ Forex accounts, according to the complaint. Following through on the NFA rule in 2009, Ikon identified customers who maintained matched trades and closed them out. The NFA audited the practice and found that Ikon had followed NFA procedure, according to the complaint. However, two forex retail customers asserted arbitration claims against Ikon alleging they lost money or opportunities for profits when Ikon closed out their hedged transactions. Arbitration led to openly contradictory results, with Ikon defeating one of the claims but the NFA arbitrator awarding damages in the second proceeding, according to the complaint.
“As a result of this unlawful NFA award, and its inconsistency with another NFA award denying such a claim, IKON is faced with an irremediable dilemma unless this court acts to set aside the NFA action,” the complaint said. “IKON has a regulatory duty to offset these types of positions, but as a result of the adverse NFA arbitration award, IKON may face further exposure and liability to customers in NFA arbitrations.”
