NFA Dead Forex Firms Walking

I am glad that some of the tips maybe helped warn some of the potential big losers with One World. I could not reveal the exact goings on, but at least Forex Scholar got out the word, partially on my behalf, in bits and pieces.

To anybody remotely connected to the place, the fact that customer money was being used for stuff other than what was represented was quite obvious.

Chicago is not called "the world's smallest big town" for nothing and one of its most prominent neighborhoods is the exchange community. Everyone knows each other... for years. The floors are like one big high school assembly that gets together every day.

I learned a long time ago, "what goes around, comes around". Hopefully this nightmare will be over and I hope people honestly get back their funds that were used for "other things". :clap:


forex scholar said:
One of the very first forex dealers that the Scholar shined his light on was One World Capital. Here is an excerpt from the summer of 2007: Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool



Over the next several months One World rapidly circled the Bowl:
Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool



Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool



Finally, like that fat man in the Monty Python sketch who exploded upon eating a mint One World’s bloated and rotting gut burst into a million pieces in December of 2007 when regulators shut the firm down for good:
Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool

Now the Feds have swooped in and arrested John Walsh and friends. Leading the charge is Patrick Fitzgerald. Fitz can mount Walsh’s head above the fireplace, right next to former kills like Scooter Libby and Governor Blago. Welcome to the party pal: Feds arrest 2 Winnetka futures dealers on fraud charges -- chicagotribune.com
Click to expand...
 
Alpari Struggling to Meet Cap Requirement?

The NFA’s next scheduled capital requirement is set to kick in on January 17th at $15 million. Firms offering leverage of over 100 to 1 therefore must have over $20 million set aside. Alpari was showing $18 million in their last net capital filing but still appear to be about $5 million short of the amount required to offer leverage greater than 100 to 1. Therefore, Alpari has just announced they are raising their margin requirement:
Change to Customer Agreement and Terms of Business

Company News – January 8, 2009: Change to Customer Agreement and Terms of Business

Effective January 18, 2009, Section 2 of the Customer Agreement and Section 6 of the Terms of Business are being amended as follows:

CUSTOMER AGREEMENT – SECTION 2. SECONDARY RISK DISCLOSURE: HIGH RISK INVESTMENT

In accordance with these changes, effective January 18, 2009, Alpari (US) will increase its stop out level to 100% of the required margin.

Please refer to the following example for an explanation on how this will affect your trading:

Assume that the quote for the EUR/USD is 1.2600, and you have $5,000.00 in your account.

Assume that, today, you open a position of 1 standard lot of EUR/USD. If the price moves against you after you open your position, MetaTrader 4 will automatically close your position around $252.00 (20% of the required margin), with a loss of around $4,748.00.

As of January 18, 2009, you open a position of 1 standard lot of EUR/USD in your account. If the price moves against you after opening your position, MetaTrader 4 will automatically close your position at $1,260.00 (100% of the required margin), with a loss of $3,740.00.

Please note the following: all positions that are left open with insufficient margin after the market closes on January 16, 2009 will be automatically closed upon the market’s re-opening on January 18, 2009, without further notice.

Team of Alpari (US)
Click to expand...

With the new cap requirement scheduled to kick in shortly expect more such announcements. Traders who employ high leverage may want to consider winding down their positions if they are trading with smaller brokers to avoid any nasty margin calls.
 
New Net Capital Numbers

The CFTC has just released their latest net capital figures. With the $15 million dollar deadline just days away who will make the cut and who will not?
Financial Data for FCMs

The following firms have net capital below $15 million

Advanced Markets $10,195,000
Hotspot $10,527,000
Easy Forex $10,606,000
GFS Forex $12,861,000
MB Trading $14,664,000

AMIFX, HotSpot and Easy Forex are really behind the 8 ball. They are not even close to the $15 million mark. Sure the CFTC cap report lags about six weeks behind but time is running out and these firms have not shown any kind of gradual increase in their cap numbers unlike their other competitors.

The following firms have net capital below $20 million

IKon Royal $15,013,000
Forex Club $15,823,000
I Trade FX $17,098,000
Alpari $18,158,000
ODL $18,982,000

The following firms have net capital above $20 million

CMS Forex $26,540,000
PFG $27,704,000
Interbank FX $42,954,000
FX Solutions $45,125,000
GFT Forex $73,808,000
Gain Capital $102,959,000
FXCM $131,416,000
Oanda $170,799,000

As always conduct your due diligence and make sure the firm you are trading with will be able to comply with the new $20 million capital requirement going into effect in the months ahead.
 
ODL Says "NO MAS!"

ODL Securities has developed a nervous reaction to the battery of new regulations in the United States and has officially thrown in the towel. They are closing their U.S. office and shipping all their customers to FXCM. ODL released a fascinating press release making the announcement:

ODL Securities Sells US Business

ODL Securities Sells US Business

ODL Securities, the leading independent FOREX, derivatives, equity, spread betting and commodity trading house has sold the US division of its profit making US Forex business to Forex Capital Markets LLC (FXCM).

The move follows the current and planned implementation of new and more complex regulatory rules that have made it increasingly burdensome for all Forex Dealer Members to operate in the United States. These include increases in the minimum amount of regulatory capital that a Forex Dealer Member must maintain - up by three times over the past year and due to increase further in May to $30mn.

A strategic decision was therefore taken by ODL to use its financial capital more efficiently to fuel its growth in other parts of the world.

As part of its expansion strategy ODL Securities will open new JV offices in Turkey and Australia in the very near future, and expand its operations in Japan and Canada. In the UK head office, the business has been restructured to improve its offering with a focus on multi-lingual customer service and support (ODL now has clients from over 100 countries).

Announcing the sale, Graham Wellesley, Chief Executive of ODL Securities, said: “This has been a hard decision for us to make, ODL Securities Inc. is a very successful and profitable operation, but we could not justify disproportionately supporting one of our smaller subsidiaries.

“We remain firmly committed to expanding our international reach and to that end we have dramatically strengthened the management and resources of our UK Sales and Servicing Teams as well as developing new ventures in Europe, Asia and Australia. We remain profitable and our strategy will continue to focus on growing the business in 2009.”
Click to expand...

Higher capital requirements are clearly squeezing smaller forex brokers and there are sure to be more brokers leaving the industry in the months to come. Traders need to be very wary of opening up long term positions with brokers who have less than $20 million in capital. As we have seen these smaller forex brokers close up shop (or raise margin requirements) with barely any warning to their customers. Traders deserve better peace of mind than that. It is hard enough just trading in these crazy markets let alone having to worry if your broker is about to close their doors and give your account the boot. Money talks in this business. If your broker can’t crow about having lots of capital on hand, beware…
 
Hmm...so the rumours were true then.....

Makes me wonder though , ODL looked to be so close to the 20mill threshold.........or were they?
 
Crown Forex Still Under Siege

Francesc at FX Street is reporting that the SFBC investigation of Crown Forex continues and that customers still can’t withdraw their funds. However, it appears the blockade may be lifted in a few weeks time.

Francesc’s Weblog Update - Crown Forex investigation… still weeks to go

As I know many of you are highly concerned for the sake of your money at Crown Forex as the firm is currently under SFBC (Swiss Federal Banking Commission) investigation, I’m trying to be in close contact with management at Crown Forex and SFBC in order to keep you as best updated as possible.

Today, I got a phone call from SFBC. My counterpart was not able to confirm me when the investigation will end but from our conversation I got the feeling that we are not far from it.

I had been previously told that we could see the end during this week but it seems that the investigation will still last for some more weeks.

What I do get a confirmation is that it is totally true that SFBC does not allow traders to withdraw their money till the investigation will finish. To get this confirmation from SFBC is definitely a relief for me and I hope it is for many of you.
Click to expand...

This is what can happen to you if you trade with an unregulated broker. Beware Swiss brokers that do not have a banking license.
 
First half of January statistics

Dear traders!
For first half of January our system Gamma has earned 114 pips or 6,2 %, under condition of observance of our MM.
All good luck and stable profit!
Yours faithfully,
 
Trouble Ahead for MG Forex?

Last year Rosenthal Collins bought MG Forex just as the first capital requirement was set to kick in. RCG then announced that MG Forex was a subsidiary of Rosenthal Collins Securities, which is regulated by FINRA, not the NFA. Thus MG Forex was able to avoid the $20 million capital requirement since FINRA members need only $250,000 in capital.

That was then.

Last week FINRA released a proposal capping the margin level that forex brokers can offer at 1.5 to 1. Essentially, FINRA is saying you can’t trade forex on margin.

FINRA - Regulatory Notice 09-06

The rule will not effect NFA registered forex brokers. But for those forex brokers with FINRA licenses the party appears to be over. Why is FINRA doing this?

FINRA has observed a potential migration of retail forex activity from the FCM channel to Broker Dealers…
Click to expand...

Hmmm, couldn’t be that forex dealers who didn’t have the capital to keep their NFA licenses were suddenly showing up to get a broker dealer license on the cheap? Well, if that was the case consider that escape hatch to be boarded up.

What will MG Forex do now?
 
HotSpot Getting Out of Retail FX

Yet another small forex dealer is getting out of the U.S. market. HotSpot FXr is closing down their retail fx business and selling their customers to FXCM. This would be the third forex dealer that FXCM has feasted on this month.

FXCM Acquires Certain Assets of Hotspot FXr’s Retail Forex Business

The consolidation of the retail fx industry in the U.S. has dramatically accelerated in the last few weeks with ACM, ODL and now HotSpot departing.

HotSpot’s case is particularly interesting. They are owned by Knight Capital which certainly has plenty of cash to meet the $20 million requirement. But apparently their retail business isn’t large enough to justify their continuing operation.

Again, this is why a firm’s net capital number is so important. Many thought that because HotSpot was owned by Knight they didn’t need to report a lot of capital. But it turns out that Knight was not willing to fork over the money needed to keep Hotspot FXr a going concern. At the end of the day, HotSpot’s net capital number was a spot on indicator of the firm’s viability. Taking nothing else into consideration, their number gave off the impression of a firm struggling to stay afloat. So in the end is it really a surprise that their retail business sank to the bottom of the ocean?

Once again, traders should be aware of the risks you take by trading with a forex broker with net capital below $20 million. As we are seeing smaller forex brokers are liable to close up shop giving their customers very little notice. Here today, gone tomorrow.

Or in HotSpot’s case, gone in two weeks time…
 
Dammit!!

Thought I had beaten Forex Scholar to that one....was getting all excited to break the news, look on here and whammo!......here he is already :D


Well done mate!
 
No Justice! No Peace!

As we await the next CFTC Net Capital Report I thought I’d post some of the best trader thread titles I’ve seen on the Net’. Many an angry trader loves to lash out at their broker or adviser and there are some pretty humorous, if not over the top, thread titles detailing the woes and eccentricities of the retail fx trading public. Here are some of my favorites:

1. “GFT Forex – Nazi Paradise”
Forums - GFT Forex - Nazi Paradise.

Apparently, the creator of this thread, “IShopAtPublix” has never heard of “Godwin’s Law,” which states that invoking Hitler or the Nazis in an analogy serves to discredit the person who is injecting Der Fuhrer into the conversation. So why was this trader calling out GFT for being jackbooted storm troopers? Because they asked him for a photocopy of his credit card…

“Vee Hav Vays of Making you Talk!”


2. “FX Open Scam Scum”
FXOPEN SCAM SCUM - Page 9

Months ago I wrote about a broker war between FX Open and Poltek FX. Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool

Sadly, a tentative cease fire has appeared thus robbing the trading public of one of the most entertaining flame wars on the Internet.

Hot on the heels of this truce comes another “Peace in our Time” declaration as thread creator “Maxey” announces that he has gotten his long awaited payout of $70,000 from FX Open thus bringing a close to the volatile “Scam Scum” thread at Forex Factory.


3. “Felix with a Criminal Record (Forex Peace Army Under Government Investigation)”
http://www.trade2win.com/boards/for...governmental-investigations-5.html#post622628

The last year and a half has seen Felix Homogratus’ Peace Army under heavy scrutiny on various fly by night blogs and all over the bulletin boards. This is but one of the innumerable threads where the Peace Army does battle against its critics. In this one “Tom Harris” can be found ranting about the Peace Army being under government investigation. Mind you, no proof of such an investigation is ever presented but we are reminded that Forex *******’s girlfriend was thrown in the clink a year ago.

If you like the “paranoid style” this thread is for you.


4. “Patrict Sim’s (ExpertForextrader) Failed Arbitrage Strategy – Professional Scammer”
Patrick Sim's (ExpertForextrader) Failed Arbitrage Strategy - Professional SCAMMER

TalkGold is one of my favorite forums and has more threads than you can shake a stick at. Granted, many of the threads are from shameless marketers selling every forex related product under the sun, but that’s what makes the forum so interesting. It is a total free for all and gives traders a wonderful bird’s eye view of the utter chaos that is the retail forex market.

In this thread a trader by the name of “patricksim*******” excoriates the real Patrick Sim whose trading signals “patricksim*******” doesn’t seem to care for:

Please be informed that “expertforextrader” is a scammer. He is based in singapore and he has been soliciting funds from investors with his failed bogus strategy. I'm a one of his victims. Here are his deeds and all the amounts discussed were in SGD. All these were under the pretense of using his so called arbitrage forex strategy which serve to fail.

"Expertforextrader" is no expert but a professional clown. He is a 58year old (as of 2009) BANKRUPT man who went bankrupt because mere credit card banks initiated by the bank of amt $20,000. He used to be a former Singapore Airlines Co-Pilot and was sacked as a result of his neglience in flight as just like his attitudes towards his boo hoo forex stategies.
Click to expand...

I like the “professional clown” appellate. So does patricksim******* have a case? Don’t know, but whenever I see someone claiming to have a “Holy Grail” forex trading system as Patrick Sim claims to have I make it my business to stay as far away from such “experts” as I can. Patricksim******* should have done the same.


5. “Oanda- Add Your Scam Screens Here”
Forums - Oanda - Add Your SCAM SCREENS Here

81 pages and still going strong. What has Oanda done to deserve such disrespect? Well, nothing. At least nothing out of the ordinary. Bad fills are a dime a dozen in retail forex, especially if the broker you trade with is a market maker taking the other side of the trade. Yet that doesn’t stop traders like “forestgril” from declaring jihad after they get a bad fill and taking to the bulletin boards to declare a fatwa on their broker. Another poster on this thread sums up “Forestgril’s” situation perfectly:

Forums - Oanda - Add Your SCAM SCREENS Here

Why are you still using Oanda if they are costing you money? You have been pissing and moaning about them since the beginning of March with their executions and phantom prices, etc. Why do you still use them? Why have you not found a "better" broker for your trading style rather than stay with the same group that causes you such fits? If you come back here next month at NFP with the same complaints than you have no one to blame but yourself. It only takes a week (at most) to set up an account somewhere else.
Click to expand...

Ah but nothing beats blaming your lousy trading on those rascally brokers does it? In any case Forestgril will not be denied:

I will switch to another broker, but first I will beat them and get my lost money back. It is unreasonable, but I want them to see, that all in all - my account was not profitable to them. For my satisfaction - I will get from them twice the sum, that I have lost, and then - get out.
Click to expand...

Well, the best of luck to you Forestgril. You have your work cut out for you- as do all the disgruntled traders of fx world.
 
I must admit fella I rather enjoyed 'The Robert Gray' story from FXLQ ,In fact I would wager that any Hollywood scriptwriter worth his salt could not have penned a better screenplay than what Robert Gray created in this cluster****.

I would also pay to watch the resultant film as well, would be a thriller,horror and comedy all thrown into one....not much on the romance stage though granted.

Cheers
 
Olint Was a Ponzi Scheme

Sources are telling Jamaican media outlets that David Smith’s infamous investment scheme has only $10 million in local cash on hand. In short, it has become clear that David Smith is the Bernie Madoff of Jamaica, with the exception that Smith’s Ponzi Scheme is doing far more damage to the local economy: http://www.sunheraldja.com/article/show/2177

Although banker/client confidentiality prevents the Michael Lee Chin controlled National Commercial Bank of Jamaica (NCBJ) from disclosing details of its relationship with clients, highly placed sources say that the David Smith, led Olint Corporation only has US$3 million in its local accounts and about $7 million in those in the Turks and Caicos Islands.

Speculation has been rife as to how much money is in the company’s local accounts, since NCBJ got the go ahead from the Privy Council to close the renegade foreign exchange dealer’s accounts. Olint reportedly owes cash strapped investors some US$100 million. The company’s inability or unwillingness to pay investors since the end of the year 2007 has been having a negative impact on the construction and real estate, automobile as well as retail sectors.
Click to expand...

Meanwhile, the NFA has yet to issue a ruling in regards to its complaint against I Trade FX: Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool

Smith was a formal principal at I Trade FX and while the NFA is not investigating Smith himself a ruling by the NFA could help clear up exactly what Smith has been doing with his customer’s funds all these years.

Hopefully, regulators have this case at the top of their “to do” list. It is far too important for them not to.
 
Will Russian Forex Brokers Fall along with the Ruble?

The news from Moscow has been grim recently. The fall of the Russian Ruble has policy makers mulling over some scary choices; including the imposition of stringent currency controls which could block customers from withdrawing their funds from Russian based forex brokers.

Russia may float ruble to halt slide

The whole situation is reminiscent of the Asian Currency Crisis of 1998. A full collapse in the Ruble could not only lead to huge losses for any traders who have Ruble denominated accounts but could also destroy banks and brokerages throughout Russia who would be bankrupted when they are unable to pay back dollar denominated loans with worthless Rubles.

It is something that traders who have accounts with Russian based forex brokers (i.e. Broco Company) need to seriously take into consideration.

Russians are already dispensing with the Gallows’ Humor by quoting 19th-century writer Mikhail Saltykov-Shchedrin: "It is not a tragedy when in exchange for a ruble you get half a ruble; the tragedy is when in exchange for a ruble you get a punch in the face."

Well, too many forex traders have gotten punches in the face instead of their money back as I have detailed on this thread (and even as we speak Crown Forex is busy socking their own customers in the chin with the rage of Christian Bale on a movie set:
YouTube - Christian Bale Goes ApeSh#t on Terminator 4 set)

The good news is if you are trading with a broker that offers USD/RUB all I can say is “Buy! Buy! Buy!”
 
Breaking News: David Smith Arrested

The hounds are closing in on David Smith. With his Ponzi Scheme in ruins the police in the Turks and Caicos Islands have arrested and frog marched Smith before a magistrate court; where he promptly ponied up $1 million in bail money...

Turks and Caicos Net News Online: Bringing the Turks and Caicos Islands to the World
Jamaican David Smith, the head of Olint TCI Corporation, was arrested in the Turks and Caicos Islands on Thursday on eight charges.

According to TCI police press officer, Sgt Chase, Smith was arrested on two counts of uttering false documents, four counts of forgery, and two counts of theft; he was subsequently released on $1 million bail and will appear in the magistrate court at a later date.
Click to expand...

Don’t you just love how these Bernie Madoff types claim to be broke and bankrupt and yet always seem to have that cool million stuffed under the mattress that they can whip out on a moment’s notice? If he can produce $1 million in bail money surely he has more money stashed away. So what’s to prevent him from hiring a private jet and fleeing to Cyprus or the British Virgin Islands to start all over again?

Still, silence from American regulators. Now that Smith has been arrested and charged with fraud surely I Trade FX’s case will be decided upon shortly? Smith was a former principal in I Trade FX who made some highly suspicious transactions with the firm. In 2007 I Trade FX’s net capital fluctuated wildly and all the while David Smith was behind the scenes cutting deals left and right. The NFA needs to clear the air once and for all.
 
You must log in or register to reply here.

Similar threads

I
NFA proposes change in forex fee structure
Replies
0
Views
2K
ingot
I
marlintrdg
New NFA Compliance Rule 2-43 Forex
Replies
10
Views
4K
marlintrdg
marlintrdg
tar
NFA files an administrative complaint against Interactive Brokers
Replies
1
Views
3K
FringFX
F
S
NFA levies $2,000,000 monetary sanction against FXCM and orders refunds to customers
3 4 5
Replies
89
Views
23K
pboyles
P
A
NFA hits FXDD with multiple charges ,fine over $3.5million
Replies
0
Views
2K
against
A
Top