CWM FX - I Told You So !

[Watfordwig]

Thank you so much for the reply Delta!

Hi Guys,

I just thought I would put up some additional information to give you all some clarity. Unfortunately, my original post was deleted so I cannot repost it exactly as before but will put up some of the salient points.

I worked briefly for CWMFX in December and resigned in disgust after just a couple of days.

1) It was an absolute boiler room. Seriously,it was truly beyond bad. They had a large room with salesmen standing up constantly (only two 15 minute breaks and a 1 hour lunch break were allowed). Nobody could sit down for more than a few seconds or they were shouted at so they were standing almost all day from morning to 7 pm selling on the phone. There was constant shouting/pressure to achieve sales targets.

2) There was a really huge turnover and people were being fired constantly (in my brief time there a handful disappeared and I worked there for only a couple of days !). There were no work contracts at all. They literally had deodorants on the desks as the place got very hot and sweaty (bringing new meaning to the concept of a boiler room). There was also huge pressure to sell through introducing brokers and to sell to friends and family (and I am sure many of the people who invested on the platform were probably introduced by people they trusted).

3) The account executives were mostly former wine/carbon brokers and some were just teenagers. Many members of the management team had a background from binary options firms (One 2 Trade I believe) and some had no financial background at all (the main manager was a yacht skipper previously I believe). Didn't inspire confidence.

4) In and of itself this was not against regulations just very very aggressive, highly questionable and unethical. What was very wrong was the extremely misleading sales practices. FX is very risky and people were being promised a safe 'second income' and no risk warnings of any kind were given. In fact, just the opposite. It was being touted as a new asset class with boundless profits and rewards (In my previous deleted post I put up this link as evidence http://uk.whocalledme.com/PhoneNumber/02036953844 ). This was totally against UK regulations.

Anyway, in my assessment the figures still did not add up. Even if I assumed that they were churning their clients to get maximum commissions out of them and not paying their staff after squeezing them dry it still would not have been enough to pay for the Heron Tower office and all their marketing expenses and 'show'. There would never have been enough money to generate a profit and something was missing.

Then I learned later what was really happening. Apparently, they were speaking to people 'off the record' about a 'guaranteed investment' (there were posts on other sites about this I read and I heard something about it while I was there). They were telling them that they had infallible traders at the office and a wealthy billionaire CEO who would underwrite losses (but he wasn't on the Times Rich List and I had never heard of him). They also had a rent-free period on their lease. The assumption was that they were taking in this 'off the record' money without properly accounting for it. Of course, generating guaranteed stable risk-free returns on the highly volatile FX market is practically impossible. The assumption was that there would come a point where the 'investment ' would not pay off and they would either pin it on somebody internally or say the money never existed at all or that it was sent offshore. Then they would bail out of the office snazzy office and shut up shop. A classic Ponzi scheme (this is what another poster FX Victim suggested and it seemed to fit the facts).

Now irrespective of whether it was a Ponzi scheme or not. They did not have the license to market asset management services in the UK. They certainly did not have all the regulatory systems and controls in place for AML (taking money from clients 'off the record') and ...obviously...they were not giving people clear brochures or fact sheets as per UK regulations and their sales tactics were misleading. So it was still illegal. It is impossible to say if they were running a Ponzi scheme without a full investigation (although, in view of their huge fixed costs and marketing and the way they took in the money, it would be the only plausible explanation that makes financial sense) but what they definitely did was against UK regulations nonetheless.

Hence for this reason I gave 'my fellow man' a 'heads up'. Both potential employees (and existing ones for that matter) as well as future investors. I advised CAUTION and certainly made it clear I had no axe to grind and that I was not a disgruntled employee. I left it up to everyone to make up their own minds and do extra due diligence.

Incidentally, I don't think that Leverate was part of this. They are essentially a white label platform and probably had no idea of what was going on.

Anyway, if anyone has made this kind of investment I recommend asking for a refund. If they do not pay your money back perhaps speak to the Financial Ombudsman Scheme. I hope in my heart that you have enough evidence/paperwork in terms of transferring money etc that you can prove you paid in the money.

 

[NVP]

tough one for the T2win team .............

I know nothing of this particular matter or issue here and cannot therefore comment

but I've had a few issues myself in the past when I have taken a stand against certain trading products and Vendors

I have then taken a step back to avoid any complications - but always after ensuring I had at least sewed ample due diligence seeds for anyone who was part of my network.......caveat emptor

N

 

[Watfordwig]

I was told it was 100% safe because of the Billionaire CEO was underwriting each and every customer on the managed account and backing their investment with his own money. .
Aparantly he wanted to set up this "deal" to prove to people it was possible to pay such great returns...

If the CEO is a billionaire why isn't he on any rich lists? Also aparantly he used 500 million of his own money to set up this platform.
These are stories I heard on another website. Something really don't add up with this.
Bernie Madoff anyone??.....

 

[Tracker535]

I was told it was 100% safe because of the Billionaire CEO was underwriting each and every customer on the managed account and backing their investment with his own money. .
Aparantly he wanted to set up this "deal" to prove to people it was possible to pay such great returns...

If the CEO is a billionaire why isn't he on any rich lists? Also aparantly he used 500 million of his own money to set up this platform.
These are stories I heard on another website. Something really don't add up with this.
Bernie Madoff anyone??.....

Perhaps he's donated to Comic Relief as well, he certainly sounds like he enjoys a joke........

 

[Watfordwig]

Perhaps he's donated to Comic Relief as well, he certainly sounds like he enjoys a joke........

Who?
What do you think of all the stuff you've read about CWM?

 

[Fxvictim]

Mm mm.......
I would be careful about what you post on here in case there is any poster coaxing people to say things that may lead to a legal challenge!!
Maybe someone has sent a PM. To you asking if it was , I don't know, maybe a Ponzi scheme or something like that ��

 

[Tracker535]

I hear what you are saying and of course we don’t want to get T2W into trouble, however nobody needs to make outlandish claims on here, just state some facts.
One tactic often employed by companies who are operating somewhat dubiously, is to fire off legal threats to any post anywhere that brings into question their methods. Now, I’m not saying this comment relates to any company in particular, just that it does happen. There have been many instances on Motley Fool for example of legal letters and then a few months later the authorities pounce, but I do understand that sites and forums really don’t want to spend days in court defending themselves.

Interestingly though, statements of facts are normally considered fine.

So, lets run a statement of fact that we all know and of which much is in the public domain:

• The business offers FX trading accounts; you sign up and use their trading platform.
• Most, if not all, the staff are very new to the FX business and don’t have a depth of experience. Many have come from what they themselves state as a “private trading company” and some have links to Binary Options businesses. These types of business can be identified by several articles written by Tony Hetherington in the Mail on Sunday, regarding a Cyprus based business in particular.
• They take their regulation from Cyprus to offer client accounts and run the money through that regulation. They operate in the UK under Passport rules and are not directly Authorised, which means anyone dealing with them does not have any recourse to the FOS or FSCS.
• It has been said that they market fairly aggressively for new accounts and then “advise” on trades, which may or may not be profitable. Obviously account turnover is key; as this generates commission and thus revenue for the business.
• Their CEO has no background within this type of business and one of his previous ventures was subject to an FSA warning regarding unauthorised activities.
• They are based in Heron Tower which is not cheap, and have a number of sponsorship deals which again would not have come along for free. Therefore it is a reasonable assumption, given the newness of the business, that these are not being paid for from current activities, but from different sources of funds.

Now we should turn our attention to what is being marketed as a private investment. This one gets slightly more tricky as it has been alluded to on here and has had the detail pulled by T2W in response to letters from CWM.

There has been offered, and taken up by quite a few, a private trading programme by the current CEO and MD of CWM.

In brief it runs along these lines:
• You send a minimum of £100k to an offshore account in the Caymans, which is then routed to a segregated account at Commerzbank in Germany and then into RBS in the UK. Whilst the account is marketed as segregated you are not asked sign off account forms yourself, so one would assume this is an omnibus account of sorts. You can’t see the account as it’s on an institutional platform. This process may have changed, however this is what it was a couple of months ago.
• They use only £10k of the £100k to trade and do so around 300 times day.
• They have no access to the remaining £90k, as the account at RBS is a Limited account.
• They trade using RBS and Citi for liquidity, they leverage three times your £10k, and because they move so much money they deal with no commission and with no spread.

• They have a stop loss at the entry price, so its almost impossible to loose money.
• If you do loose on the account, their backer who is a Greek billionaire (not named) will cover your loss.
• They make for you as a client a guaranteed 5% per month, that’s 60% per year.
• They pay introducers of clients around 3% a month, that’s 36% per year, on your investment, less if it comes through a SIPP.
• Avalon SIPP have been used in the main, with advice given by an FCA regulated IFA called Furness Financial Management who are based in Staffordshire.
• Using their guaranteed returns of 60%PA plus the introducer fees of 36%PA this equates to a 96% return on £100k which is £96k. Trading £10K leveraged three times to £30k this would equate to a real return of 320%PA, guaranteed.

I’m prepared to back up my comments above as, not only do I have most of them in writing from various promoters, I also have access to people who went along to the presentations and walked away, but are happy to sign affidavit’s if required about what was offered.

So, if all the above gets a letter from CWM then T2W should feel free to contact me, they have my details, and I will indemnify them against all and any legal action. I am happy to take these people on, in court, and to defend what I’ve written. I have no issues with taking this stance and asking a financial services organisation to defend in court, with evidence, claims they are making in private. If it turns out they are all above board and it really works, I’ll cover the claim. I have good lawyers and deep pockets, plus I’m quite experienced in these things (draw from that what you will) and am fed up with these types of opportunities being passed onto the average investor.

 

[Lightning McQueen]

so the advice given by Furness was to use Avalon right?

both Avalon and Furness appear on the face of it to be separate entities, but if you look at the directors of both companies they do have a tentative connection.

 

[Mel656]

Hi

I have specifically subscribed as I found this thread valuable. Thanks all. I think you have just saved me and a fellow investor £100K.

I would like to ask deltatrader12 specifically do you know about or come across in your 2 days with CWM the following:

1. 5%per month via introducers (this is unregulated)
2. 3% per month, there are 2 flavours:
a. Regulated SIPPable
b. Regulated cash
3. the 3% per month is supposed to be a Guernsey account
4. the 5% per month a Caymans account

any details behind this would be helpful

 

[deltatrader12]

Thanks for the post Tracker 535. I have had little in the way of experience in terms of these kinds of forums and the legal implications for the forum owners. (Perhaps I have been brainwashed by US propaganda about freedom of speech being a right protected by law ?) Anyway, I understand that a more 'factual' post is safer from the point of view of T2W should they receive a legal letter. Incidentally, I noticed several negative posts on Motley Fool regarding CWM were deleted probably due to a written request from CWM.

I did slightly edit and modify my post of March 13 th, however, my overall message was one of urging caution and due diligence following the very unpleasant experiences I had on the sales floor and as an employee. I did my best to present things from a factual point of view rather than emotional but perhaps could have worded the post better and will do so that way in the future.

They included:

1 Very aggressive sales tactics
2 Lack of risk warnings to prospects and false and misleading statements regarding rewards including the promise of a '2nd income'
(http://uk.whocalledme.com/PhoneNumber/02036953844)
3 High employee turnover
4 Lack of employment contracts
5 Management team without or with limited financial services experience
6 An unknown and unnamed 'billionaire'
7 CWM FX were recently raided by the police
8 My time there was limited and I had limited details regarding the 'guaranteed' investment scheme and I thank you for posting up some of the missing factual elements (such as the fact that investors were asked to send their money offshore to the Caymans instead of to an FCA -regulated account and that they would have had limited access to on-going information regarding their account balances). However, I did outline certain details such as an investment underwritten by a mysterious billionaire and guarantees of returns (such guarantees are essentially impossible under UK regulations).
9 I also knew that CWMFX did not have a discretionary asset management or advisory license in the UK. They were purely an FX brokerage platform and could not legally give advice or 'sell' investments to the retail investor.

All of the above is verifiable and I felt it was enough for me to share my experiences with others on the forum and give people a good reason to exercise caution.If need be I can furnish any 'factual' information that might be needed.

 

[Watfordwig]

Was the Billionaires name hidden? I have always been very aware of who he is but I have Googled him numerous times and cannot see anything on his wealth...

 

[deltatrader12]

Hi

I have specifically subscribed as I found this thread valuable. Thanks all. I think you have just saved me and a fellow investor £100K.

I would like to ask deltatrader12 specifically do you know about or come across in your 2 days with CWM the following:

1. 5%per month via introducers (this is unregulated)
2. 3% per month, there are 2 flavours:
a. Regulated SIPPable
b. Regulated cash
3. the 3% per month is supposed to be a Guernsey account
4. the 5% per month a Caymans account

any details behind this would be helpful

Hi,

In my time at CWMFX I came across activity which was against employment regulations and against regulations regarding the mis-selling of financial products and services (please have a look at my recent 'more factual' post).

Regarding the 'guaranteed' investment. I was there for only a short period and was not aware in full regarding the precise mechanics of the investment program. Based on conversations I had in CWMFX the general details were expressed verbally. However, these details were enough for me to advise caution to users of the forum particularly in light of my experiences of the company's lack of ethics, lack of basic compliance and aggressive sales practices (details such as lack of UK FCA advisory or discretionary licensing, mysterious underwriter, stable and guaranteed returns on the volatile FX market etc etc). I left it up to others to do their due diligence.

I think, however, that there are more than enough people out there with first-hand experience of precise details/mechanics of the investment program that they may be able to answer your questions better regarding these details.

 

[Watfordwig]

It's just hard trying to find those people that can help me with this situation.

Thanks again for your input.
Steve

 

[deltatrader12]

Was the Billionaires name hidden? I have always been very aware of who he is but I have Googled him numerous times and cannot see anything on his wealth...

Hi,

To clarify.

The CEO is well known, Mr A. C. However, I have heard variously that Mr A.C. was himself a billionaire and also that another billionaire or billions are mysteriously behind him or backing him.

Of course, the 33 year old Mr. A. C. is nowhere on Google as being a billionaire. Hence, this is something I will leave to others to investigate. To me it remains a mystery.

 

[Watfordwig]

It's strange isn't it....something doesn't add up to me.. surely he would be on a Rich List somewhere..
I saw on another site that he had to invest 500 million to get his platform off the ground..

I have no idea what to believe anymore when it involves this company or a certain "Billionaire".....

 

[deltatrader12]

It's strange isn't it....something doesn't add up to me.. surely he would be on a Rich List somewhere..
I saw on another site that he had to invest 500 million to get his platform off the ground..

I have no idea what to believe anymore when it involves this company or a certain "Billionaire".....

I will leave it up to you to decide. I am trying to keep my posts factual.

But thinking logically. Surely a company which is not afraid of publicity in any way would have no reason to hide the mysterious billionaire and his source of funds from the press? Particularly, as he appears to be underwriting a FX investment of theirs and associating himself with the enterprise. Why is he nowhere on Google? Not a single article on Google (a fact) or in the public domain elsewhere.

At 33 years old, Mr A. C is a bit young to be a self-made billionaire (this would surely have generated the interest of journalists or generated positive PR for his activities). Perhaps family money or mysterious offshore backers ? I simply do not have the resources to investigate and do not know. There are many possible explanations of course for this but, for me, it was indeed a mystery. Hence my description of 'unnamed mysterious billionaire' as I had grounds for suspicion that Mr A C was not a billionaire at all but purely a CEO if for no other reason than based on information in the public domain.

 

[Watfordwig]

You couldn't have taken the words from my mouth any more accurately Delta.

Something stinks....

 

[Mel656]

I heard that Mr A.C's father has made money in the rag trade in East London, but that Mr A.C. wanted to go it alone. Again no idea so agree facts are best.

 

[Watfordwig]

Same....and his family are chilling in the Caribbean and not involved in any finance.

I hope we hear from CWMs legal team this week...

 

[Tracker535]

Hi

I have specifically subscribed as I found this thread valuable. Thanks all. I think you have just saved me and a fellow investor £100K.

I would like to ask deltatrader12 specifically do you know about or come across in your 2 days with CWM the following:

1. 5%per month via introducers (this is unregulated)
2. 3% per month, there are 2 flavours:
a. Regulated SIPPable
b. Regulated cash
3. the 3% per month is supposed to be a Guernsey account
4. the 5% per month a Caymans account

any details behind this would be helpful

I would say, just as a question and no more, if you are running a trading program that sees very positive results what difference does it make where the money flows in from?
Does money coming from the CI when traded make less than Cayman? Is there a special currency here we don't know about??
Interesting, yes?

Also, don't be confused (there's a lot of this about presently, confusion) between regulated and un-regulated. If you are a regulated firm then everything you do is regulated, end of.
Good example being the amount of firms who have been fined or shut due to unsuitable advice in un-regulated collective investments (UCIS). In this business you can't take off your regulated hat and then offer investment advice or products un-regulated.

Introducers are bringing the clients in. If it has to be a pension investment somebody else has to be in the food chain, because the SIPP needs an IFA to make it happen and he wants a cut.
You would think given the FCA are really hot on due diligence currently any IFA recommending any investment would look to ensure the money manager actually has the regulatory permissions to manage or advise on that money.
(With all these commissions running around, makes you wonder in this new world of RDR who has been paid............:whistling )

Still, good news for anyone invested through the IFA. If it is all somewhat dubious and there's a claim then the FSCS is available, so money will come back up to £85k.