U.S. COMMODITY FUTURES TRADING COMMISSION 

Three Lafayette Centre 

Office of Proceedings 

HENRI GUERIN, 

Complainant, 

v. 

1155 21st Street, NW, Washington, DC 20581 

www.cftc.gov 

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* 

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* CFfC Docket No. 12-R017 

* 

OANDA CORPORATION, * 

Respondent, 

Before: 

Appearances: 

Introduction 

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INITIAL DECISION 

Philip V. McGuire, Judgment Officer 

Office of Proceedings 

Commodity Futures Trading Commission 

Washington, D.C. 

Henri Guerin, Complainant, pro se 

Hollywood, Florida 

Kenneth F. Berg, Ulmer Berne LLC, for Respondent 

Chicago, Illinois 

Henri Guerin's complaint arises from the liquidation of all open forex contracts 

in his account by Oanda Corporation ("Oanda"). The principal allegations raised by 

Guerin in his initial complaint are: one, that Oanda did not disclose that it "acted as a 

dealer's desk," that is, that Oanda was the materially conflicted counterparty in his forex 

trades; two, that Oanda did not disclose that it quoted forex prices which could 

significantly deviate from actual market prices, which deviation in turn would create an 
unreasonable undervaluation of the account that triggered the automatic liquidation; 1 

three, that Oanda did not "abide'' by its stated margin policy; 2 and four, that Oanda's 

trading platform software hindered and prevented the timely placement of orders which 

would have staved off the liquidation.a Guerin seeks $22,639 in damages. In its answer, 

Oanda: denies any wrongdoing, unfair practices or violations; asserts that Oanda 

properly liquidated Guerin's open positions "at prevailing Oanda rates;'' and asserts 

that it disclosed its pricing policies and the conflicts arising from its role as counter 

party through four documents provided to all customers during the on-line accountopening process: an electronic business agreement, a customer agreement, a risk 

disclosure statement, and a disclaimer that disclosed Oanda's pricing practices and 

conflicts arising from its status as counterparty. 

In addition, during discovery Guerin has noted that Oanda had failed to produce 

signed and dated versions of the risk disclosure statement, disclaimer and customer and 

electronic business agreements relied on by Oanda in its defense, and in that connection 

has asserted that he could "not recall" reviewing and electronically signing these 

account-opening documents.4 Consequently, I issued a rule 12.204(c) notice that the 

following allegation would be treated as if it had been raised in the pleadings: that 

Oanda's failure to retain and produce the risk disclosure statement, the disclaimer and 

1 Guerin characterized this allegation as "price manipulation." In his complaint, Guerin alleged: "[T]he market 

prices of the traded currencies and the spread used by [Oanda] didn't reflect the market's true price and were biased 

if not adjusted to benefit [Oanda]." 

2 See Guerin's reply to Requests for Admission 7 and 9. In his revised complaint, Guerin's asserted: 

I understand that foreign exchange transactions carry a high degree of risk, but nearly 2 years after 

the fact I am still convinced that a very subtle and obscure accounting method to calculate the Net 

Asset Value (NAV) used by Oanda Corporation didn't justifY the margin call. According to 

Oanda Corporation my NAV fell short by a mere $55.91. A very fine and arguable line indeed! 

Guerin's Revised and Amended Complaint, p. I. 

3 See Guerin's reply to Requests for Admission 8 and 9. 4 See Guerin's reply to Requests for Admission 3, 4 and 5. 

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the agreements purportedly signed by Guerin supported a presumption that Oanda had 

in fact failed to deliver to Guerin those documents, which disclosed Oanda's pricing 

practices and which disclosed Oanda,s role, and resultant conflicts of interest, as a 

counterparty in its customers, forex trades.s Oanda responded that Guerin, as a 

practical matter, could not have successfully opened his forex account without accessing 

and electronically acknowledging receipt of the agreements, the risk disclosure 

statement and the disclaimer which collectively disclosed the material facts that Guerin 

claims Oanda failed to disclose. 6 As explained below, after reviewing the parties, 

documentary submissions,7 I have concluded that Guerin has failed to establish any 

violations causing damages, and thus I have dismissed the complaint. 

Factual Findings 

The parties 

1. Henri Guerin, a resident of Hollywood, Florida, indicated on his account 

application that he was retired and that he had no previous experience trading forex 

contracts. Guerin has maintained a self-directed forex account with Oanda from 

October 2008 to at least 2012. 

2. Oanda Corporation, located in Toronto, Ontario, is a registered futures 

commission merchant ("FCM,) and retail foreign exchange dealer ("RFED,). Oanda 

acts as a market maker and counter-party to its customers, forex transactions, and 

5 Guerin stated that he was "aware of the margin rules" from Oanda's website. Guerin's reply to Request for 

Admission #7. 

6 See Oanda's Response to Order to Show Cause, and Adam Prime affidavit. 7 The submissions considered include: Guerin's Complaint (with Exhibits A-D), Revised and Amended Complaint 

(with Exhibits E-G), replies to Oanda's requests for admissions and requests for production of documents, 

Evidentiary Summary, and Response to Oanda's Response To Order To Show Cause; and Oanda's Answer (with 

Appendices A-E), Response to Order to Show Cause, Adam Prime affidavit (with Exhibits 1-9), and Response to 

December 11, 2014 sua sponte discovery Order. 

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establishes its own prices, which it claims "typically correspond closely to interbank 

rates." [Answer, p. 3.] 

3. Adam Prime has been employed by Oanda since 2008 as a software engineer. 

Oanda produced an affidavit by Prime, which: one, describes the procedural steps 

Guerin had to take to open his Oanda account on-line; two, authenticates the 

agreements and disclosures electronically delivered to Guerin during the account 

opening in 2008; and three, establishes the nexus between these documents and the 

Guerin account. 

Oanda's Written Disclosures and Agreements 

4· In connection with Oanda's role as market maker and counter-party, the 

Oanda risk disclosure statements stated: 

When you enter into a foreign currency contract with OANDA, you will be 

entering into a privately negotiated contract with OANDA, as principal. 

OANDA may, in turn, enter into ''back-to-hack" transactions with others. 

OANDA includes its mark-up in the price it quotes to you. These foreign 

currency contracts are not executed on an exchange and are not cleared on 

a central clearing organization. They are obligations of OANDA and you 

will not be afforded the regulatory and financial protections offered by 

exchange-traded contracts. Both you and OANDA are obliged to perform 

their respective obligations under each transaction in accordance with its 

terms. The terms of each foreign currency contract are set out in OANDA's 

Customer Agreement, which applies to every transaction you enter into 

withOANDA. 

In entering into foreign currency transactions you should understand that 

OANDA is acting solely in the capacity of an arm's length contractual 

counter:party to you in connection with the transaction and not in the 

capacity of your financial advisor or fiduciary .... 

[Underlining added for emphasis. All caps in original. Third and fourth paragraphs on 

first page of risk disclosure statement, Appendix B, Answer.] 

8 See Oanda's Response to Order to Show Cause, at fu. 2 and accompanying text. 

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s. The Oanda/FX Trade "Disclaimer'' similarly provided, in pertinent part: 

THE FOREIGN CURRENCY TRADING YOU ARE ENTERING INTO IS 

NOT CONDUCTED ON AN EXCHANGE. OANDA IS ACTING AS A 

COUNTERPART¥ IN THESE TRANSACTIONS AND THEREFORE ACTS 

AS THE BUYER WHEN YOU SELL AND THE SELLER WHEN YOU BUY. 

AS A RESULT, OANDA'S INTERESTS MAY BE IN CONFLICT WITH 

YOURS. UNLESS OTHERWISE SPECIFIED IN YOUR WRITTEN 

AGREEMENTOROTHERWRITTENOTHERDOCUMENTSOANDA 

ESTABLISHES THE PRICES AT WHICH IT OFFERS TO TRADE WITH 

YOU. THE PRICES OANDA OFFERS MIGHT NOT BE THE BEST 

PRICES AV AIIABLE. 

IF OANDA ELECTS NOT TO COVER ITS OWN TRADING EXPOSURE, 

THEN YOU SHOULD BE AWARE THAT OANDA MAY MAKE MORE 

MONEY IF THE MARKET GOES AGAINST YOU. ADDITIONALLY, 

SINCE OANDA ACTS AS THE BUYER OR SELLER IN THE 

TRANSACTION, YOU SHOULD CAREFULLY EVALUATE ANY TRADE 

RECOMMENDATIONS YOU RECEIVE FROM OANDA OR ANY OF ITS 

SOLICITORS. 

[Underlining added for emphasis. All caps in original. Oanda/FX Trade Disclaimer, 

Exhibit 6 to Prime affidavit.] 

6. In connection with pricing, the Oanda/FX Trade customer agreement 

provided that "Oanda makes no warranty. express or implied. that the Exchange Rates 

[i.e., the rates that Oanda quotes to its customers] represent exchange rates available 

elsewhere in the market." [Paragraph 9(a) of the Oanda/FX Trade customer agreement, 

Appendix C, Answer.] 

7· Similarly, the Oanda risk disclosure statement provided: 

Moreover, any market or quote that OANDA makes for you may be based 

solely on markets or quotes that are made or quoted to OANDA by the 

counterparties with which it does business. Such quotes or markets may 

not represent the best quotes or markets available to you or OANDA from 

other sources and OANDA undertakes no obligation to obtain competitive 

quotes or markets from other counterparties. 

[Underlining added for emphasis. All caps in original. Fourth paragraph on first page 

of risk disclosure statement, Appendix B, Answer.] 

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Oanda's account-opening process 

8. On or about October 19, 2008, Guerin opened his Oanda account. In January 

2009, he would fund the account with a deposit totaling $90,000. 

Guerin's submissions indicate that he remembers little or nothing about opening 

the account. For example, during discovery, Guerin asserted that: 

Guerin vaguely recalls that he may have succinctly read the Customer's 

agreement dated July 26. 2005. on-line via Internet, but doesn't recall at 

all reading the Risk Disclosure Statement in the form that Oanda 

submitted as evidence. . . . Oanda's document may be a new or updated 

version of the Risk Disclosure Statement [dated July 2012], but more or 

likely not the document Oanda says Guerin originally received in the 

registration process [in 2008]. 

Furthermore, Guerin affirms that he never received and signed a hard 

copy of [the Risk Disclosure Statement and the Customer Agreement] nor 

has he received in return a hard copy signed by Oanda or any subsequent 

updated evolutions of Oanda's policies, be it by mail or internet. Oanda 

acknowledges that there are no physically signed documents. 

[Underlining added for emphasis. Third-person in the original. Guerin's response to 

Oanda's request #2 for production of documents.] 

Later in this proceeding, Guerin asserted that he "has absolutely no recollection 

of the [account-opening] process" described in the Prime affidavit. [Underlining added 

for emphasis. Guerin's Response to Oanda's Response to Order to Show Cause, page 6.] 

Guerin also surmised that the exhibits to the Prime affidavit consist of recent screen 

captures, and thus are not authentically representative of Oanda's account-opening 

process in 2008. [See Guerin's Response to Oanda's Response to Order to Show Cause, 

pages 6-8.] However, Guerin has neither produced any detailed description based on 

his recollection of the account-opening process, nor produced any compelling evidence 

that he could have opened the account without completing the steps described in the 

Prime affidavit. 

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9· According to Prime, in order to open an Oanda account, Guerin first had to 

enter into Oanda's on-line system his profile, including: routine personal and financial 

information; his user name and answers to security questions; the primary currency 

pairs and leverage for his anticipated trading; and his trading objectives. Guerin also 

had to elect to enable the FX Global transfer service. After entering this information, 

Guerin was prompted to review it, and proceed to the next step. A copy of Guerin's 

profile was recorded on October 14, 2008, and was saved on Oanda's client relationship 

management portal. [See Prime affidavit, ~~ 3 to 5, and Exhibit 1.] 

10. According to Prime, in order to submit an account application and open an 

account, Guerin next had to go through a four-step process, in which he agreed to each 

of the following documents: one, the Electronic Business Agreement; two, the Risk 

Disclosure Statement; three, the Customer Agreement; and four, the Disclaimer. Each 

agreement, the disclosure statement and the disclaimer were presented in a scroll-down 

format. In this connection, Oanda produced a screen shot to show how the documents 

would have appeared to Guerin. The screen shots show that Guerin had the option of 

printing a copy of each agreement and disclosure statement. 

Per Prime, in order to activate the account, Guerin would have had to click on a 

button prominently labeled "Agree" for each of the four documents. After agreeing to 

the four documents, Guerin would have then been prompted to proceed to the next step. 

[Prime affidavit, ,, 7 to 9, and Exhibits 2 to 6. See also first paragraph on first page of 

Oanda's Answer.] 

11. According to Prime, Oanda next sent an e-mail to Guerin with an embedded 

link. Although Oanda did not maintain a copy of this e-mail sent to Guerin, it did 

produce the e-mail template, which indicated that Guerin would have had to click on the 

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link embedded in the e-mail, or in a follow up communication sent to him, in order to 

complete the application process to open an account. [Prime affidavit, ~~ 10 and 11, and 

Exhibits 7 and 8.] 

12. According to Prime, the e-mail directed Guerin to submit documents 

verifying his identity. Guerin clicked on another embedded link in the e-mail and 

downloaded a form that he then completed and returned to Oanda along with a copy of 

a utility bill and driver's license to verify his identity and address. This process also 

verified the authenticity of Guerin's e-mail address. Guerin had to re-submit these 

documents, copies of which Oanda has produced, since at least one of the documents 

initially submitted was illegible. Finally, on October 19, 2008, Oanda approved opening 

an account for Guerin. [Prime affidavit, ~~ 12 to 16, and Exhibits 9.] 

The disputed liquidation 

13. Oanda's website explains that an automatic margin call will occur when the 

net asset value ("NAV") of an account declines to so% or less of the Margin Used. 

Oanda's FX Trade trading platform is designed to provide automatic pop-up alerts to 

customers who are logged into the platform when the net asset value falls within 5% of a 

margin call, and again when the NAV falls within 2.5% of a margin call. The website 

further advises: "Please note: in a fast moving market, there may be little time between 

warnings, or there may not be sufficient time to warn you at all." [See last paragraph on 

page 4 of Oanda's answer.] 

14. On May 6, 2010, Guerin had a $29,261 account balance, with two active 

positions: one Canadian Dollar/Japanese Yen (CAD/JPY) and one Australian Dollar/ 

Japanese Yen (AUD/JPY). When Oanda determined that the CAD/JPYwas trading at a 

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$19,762loss, and that the AUD/JPY was trading at a $2,877loss, it sent a margin 

warning to Guerin, and almost immediately afterward liquidated both positions. 

15. Shortly afterward, Guerin complained to Oanda via e-mail that the account 

actually had been under-margined by only $55, that he had been given inadequate 

warning, and that the software on Oanda's trading platform - i.e., pop-ups blocking 

buttons -- had prevented him from readily accessing the account to place trades. Guerin 

did not specify the type of trades that he was trying to place when he was stymied by the 

pop-ups. 

16. On May 11, the "Oanda FX Trade Team" e-mailed a reply to Guerin with its 

calculations showing that the NAV had fallen below so% of the margin used, and 

informing Guerin that Oanda had determined that the margin call and liquidation had 

been proper, and thus had decided not to offer any compensation.9 

17. Five months later, Guerin would deposit an additional $5,000, and continue 

trading. 

Conclusions 

Guerin's complaint bas touched on many aspects highlighting the problematic 

nature of retail forex trading, where: no matter how empowering retail traders' 

websites, widely available software and dealer trading platforms may appear, the 

individual retail trader is profoundly out-gunned and disadvantaged in a volatile market 

dominated by big banks; the trader's principal is placed at severe risk by leverage 

permitted to be as high as so-1; the lion's share of retail traders inevitably lose money; 

9 In the May 11111 e-mail, Oanda used the tenns "margin call warning," "margin call will be executed," and "margin 

called." [Guerin's complaint, Exhibit A.] In this connection, the Oanda FX Trade customer agreement defined 

"margin call" as the automatic closing of all open positions ifthe account equity falls below the margin requirement 

set by Oanda. Given this context, it appears that the second and third tenns used in the e-mail refer to the automatic 

liquidation of all of the open positions in Guerin's account 

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the retail dealer's pricing is opaque and provides no meaningful price discovery 

function; and the retail dealer sets the price and wins when the customer loses. Over 

the past decade or so, these issues have at least twice been brought to the attention of 

Congress which, for reasons not discussed here, has chosen not to ban retail forex, but 

rather has opted to corral retail forex, gradually, into a regulatory regime that provides a 

modicum of protection to retail forex traders. For example, the National Futures 

Association just recently banned RFEDs from the longstanding abusive practice of 

allowing forex customers to fund their trading with credit cards.10 

In any event, Guerin concedes that he has understood from the beginning that 

retail forex transactions carry a high degree of risk, and that he has been aware of 

Oanda's margin policies. Guerin's primary allegations are: one, that Oanda failed to 

provide any written disclosure about its pricing practices and about its role, and related 

conflicts of interest, as the counterparty in its customers' forex trades; and two, that the 

liquidation deviated from Oanda's stated margin policy. As discussed below, Guerin has 

failed to establish by a preponderance of the evidence that Oanda failed to provide him 

the various written disclosures which provided general disclosure of material facts 

concerning Oanda's pricing practices and concerning Oanda's conflicts of interest 

arising from its status as counter-party. Guerin also has failed to establish that Oanda's 

automatic liquidation of all open forex positions in his account deviated from Oanda's 

published margin policy. 

10 NF A Interpretive Notice 9068 (effective date January 31, 201 S) (Given that credit cards permit easy access to 

borrowed funds and given the highly volatile nature of forex markets, the substantial risk of loss, and the possibility 

of total loss that can occur in a very short period of time, permitting customers to use credit cards to fund forex 

trading accounts is inconsistent with NF A Member's obligation to observe high standards of commercial honor and 

just and equitable principles of trade.). 

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Electronic Signature and Disclosures 

Generally, the Commission's view is that electronic signatures ("e-signatures") 

may be used to acknowledge receipt of a required risk disclosure statement as long as 

the delivery and acceptance process complies with applicable Federal law and other 

Commission regulations. In 2000, Congress passed theE-signature Act, 15 U.S. C. 

§ 7001 et seq., making valid and enforceable those contracts in interstate commerce that 

are formed by an e-signature, and delivered or maintained in electronic media. The 

courts have given broad effect to the E-signature Act favoring enforcement of electronic 

contracts. For example, in Appliance Zone v. Nextag, 2009 WL 5200572 (S.D. Ind. 

2009), the court held that clicking on a box labeled "I Agree" creates a valid and 

enforceable agreement, even though defendant testified he did not actually read it. In 

Morelli v. Hertz Corporation, 2014 WL 1410432 (N.D. Cal. 2014), Hotwire submitted an 

affidavit demonstrating that an individual cannot complete a car rental booking via its 

website without checking an "Acceptance Box" acknowledging acceptance of the terms 

of the contract. The court held that to negate the affidavit a customer must present 

"clear evidence" that he could have completed his car reservation without agreeing to 

the terms of the contract and the customer must "affirmatively deny" that he checked 

the acceptance box. 

Consistent with federal law, the Commission generally accepts e-signatures the 

same as manual signatures, and electronic media the same as paper documents. The 

Commission's policy generally is that e-signatures should not be "treated as qualitatively 

different from handwritten signatures, "11 and that its regulations should be "medium 

11 See 62 FR 39104, at 39105 (Aug. 21, 1997). 

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neutral, "12 as long as the customer gives "informed consent" to do business via electronic 

delivery of required documents.13 

Commission rule 1.4, 17 CFR §1.4 (2014), permits a retail foreign exchange dealer 

("RFED") to use e-signatures for acknowledgments or verifications in lieu of manually 

signed paper documents, provided the RFED adopts "reasonable safeguards" to ensure 

the identity of the customer and "to prevent alteration of the electronic record with 

which the electronic signature is associated .... " In this connection, the Commission 

has declined to impose a requirement that a RFED provide specific e-signature 

disclosures or utilize specific customer identification measures such as use of a 

customer-unique PIN ,14 

Commission rule 1.3(tt), 17 CFR §1.3(tt) (2014) requires only that an RFED's risk 

disclosure delivery and account-opening process '1ogically associate" the e-signature 

with the record and the person who intended to sign the record. With respect to 

commodity trading advisor's or commodity pool operator's obligation to deliver a 

disclosure document, the Commission has indicated that an e-mail from a customer will 

suffice to show that "he received and understood the risk disclosure statement .... " •s 

The Commission has recognized that "greater flexibility may be appropriate where a 

signature merely evidences receipt of a document rather than validation of its 

contents. "16 In this connection, the Commission similarly noted that the "validity of an 

electronic signature ... is unlikely to become an issue except as between the Commission 

and the registrant because the signature generally does no more than confirm that the 

12 See 65 FR 12466, at 12468 (Mar. 9, 2000). 

13 62 FRat 39106. 

14 62 FRat 39110. 

15 65 FRat 12467. 16 62 FRat 39110. 

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registrant has met its disclosure or other obligations under the rules." Thus, the 

Commission considers the delivery process adequate even if it does not require the 

prospective customer to scroll through the entire CTA/CPO disclosure document .... "17 

Here, the process described in the Prime affidavit "logically associates" with 

Guerin's account opening, and shows that Oanda had "reasonable safeguards" to ensure 

that it was Guerin who completed the account opening process. Oanda's client 

relationship management portal captured, recorded and maintained the profile 

information regarding the net worth, income, occupation, and other factors that Guerin 

had in-putted to Oanda's system. During the account-opening process, Guerin 

acknowledged and agreed to each of the agreements and disclosure statements by 

clicking "Agree." 

Guerin also acknowledged and agreed by clicking on the links embedded in the email that he received. Guerin further manifested his consent by downloading, 

completing and returning to Oanda the identification confirmation form, and providing 

documentation that verified his identity. Guerin clicked on "Agree" after viewing the 

electronic business agreement, and thus gave "informed consent" to do business with 

Oanda via electronic transmission of required documents and e-signature 

acknowledgments. 

The Prime affidavit supports the conclusion that an account could not be opened 

with Oanda in 2008 without separately completing several separate steps, including 

agreeing to both of the agreements, the risk disclosure statement and the disclaimer. In 

this connection, Guerin admits he opened his account via Oanda's website, admits that 

he may have read or at least perused the customer agreement and risk disclosure 

17 62 FRat 39107. 

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statement, and admits that he was aware of Oanda•s margin rules posted on its website. 

Guerin has offered no evidence showing that he could have opened an Oanda account 

without clicking on "Agree" to both of the agreements, the risk disclosure statement and 

the disclaimer. Moreover, Guerin has not affirmatively denied that he clicked "Agree." 

Finally, Guerin•s assertion that he does not distinctly remember "signing" any 

agreement or disclosure statement is not sufficient to rebut Prime's plausible testimony. 

As a result, Guerin has not established by a preponderance of the evidence that 

he could have opened his forex account without affirmatively taking the actions 

described in the Prime affidavit, and thus has failed to show that Oanda did not provide 

any of the written disclosures about of its pricing practices and about its conflicts of 

interest arising from its status as counter-party status. 

Disputed liquidation 

Oanda•s calculation of his account's value may well have been opaque and 

disadvantageous to Guerin, as Guerin asserts; and Oanda•s liquidation may well have 

been hair-triggered, as Guerin also asserts. However, Guerin has failed to establish by a 

preponderance of the evidence that Oanda deviated from its published margin policy in 

connection with the automatic liquidation of all open positions on Guerin•s account. 

Finally, Guerin's allegation regarding the balky operation of Oanda•s trading 

platform is not cognizable in reparations because he at best has alleged a breach of 

contract. 

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ORDER 

Henri Guerin has failed to establish any violations by Oanda Corporation causing 

damages. Accordingly, the complaint is dismissed. 

February 26, 2015. 

/i)7L Y. ~<I~ Ph~cGuire, Judgment Officer 

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