Proposed NFA Capital Requirement

forexsavior · Nov 15, 2007

NFA Fines One World $100,000

And the hits just keep on coming for One World Capital. The NFA just announced that One World has been fined $100,000 for the complaint brought against them last spring.
http://www.nfa.futures.org/basicnet/Case.aspx?entityid=0359973&case=07BCC00017&contrib=NFA

For a firm already struggling to meet the coming $5 million capital requirement thatâs another 100 grand the firm will have to cough up.

Here is a summary of the NFAâs original complaint:

On June 4, 2007, NFA issued a Complaint charging One World with failing to maintain required books and records, failing to meet its minimum adjusted net capital requirement, and failing to notify NFA that its books and records were not current. The Complaint also charged One World with using misleading promotional material and failing to adopt and enforce written procedures to supervise its associates and employees in the use of promotional material. Finally, the Complaint charged One World and Walsh with providing false and misleading information to NFA.
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This was the NFAâs official decision in the One World Case:

On November 14, 2007, One World was ordered to pay a $100,000 fine and pay an additional fine of $50,000 unless certain conditions are met. Walsh was ordered to guarantee payment of the fines, in the event that One World fails to pay them.

The settlement of the case and the Decision does not relieve One World of its obligation to comply with all NFA Requirements, including capital requirements for FDMs and the increased capital requirements for FDMs which go into effect on December 21, 2007.
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I like that comment at the end, âthe Decision does not relieve One World of its obligation to comply with all NFA Requirements, including capital requirements for FDMs and the increased capital requirements for FDMs which go into effect on December 21, 2007.â

Hmm, seems to me like the NFA is worried that One World isnât going to be able to make the new requirement. Hence this gentle reminder along with the demand Walsh pay up for One World should One World default on its payment!

In any case, I strongly recommend ANYONE who has an account with One World for the love of criminy get your money out of that firm once and for all- if you even still canâ¦

forexsavior · Nov 19, 2007

Swiss FX Broker Going Down the Tubes

Three Jeers for Switzerland! Over the past year I have been documenting the sad collapse of Tradex Swiss AG. Tradex is one of the many unregulated firms that Switzerland allows to operate inside their borders without any serious oversight. When customers get burned Swiss Government officials are only too glad to sit on their hands, or in the case of Tradex, make the situation worse.

Example, customers at Tradex have been begging and pleading with Swiss authorities to grant Tradex the authority to release their funds, which they have inexplicably frozen with nary an explanation. After months of stonewalling Swiss Authorities have apparently informed the clients of Tradex that Tradex is now going into bankruptcy!

http://www.forexfactory.com/showthread.php?t=10894&page=5

The regulatory environment in Switzerland is a complete shambles. As such fx traders should avoid Swiss firms at all costs. The following Swiss firms are completely unregulated and by trading with these firms you risk suffering the same fate as has befallen the customers at Tradex Swiss AG. I repeat, YOU HAVE NO PROTECTIONS if you open an account with an unregulated Swiss firm.

Unregulated Swiss Brokers
Finex
Tradex Swiss AG
WestCapFX
ACM
MIG
DukasCopy
GFX Group (Forex.CH)
Crown Forex

Do not trade with these firms if you care about safety of funds. Here is an article from the Boston Business Review reporting on the latest from Tradex Swiss AG:

http://www.bizjournals.com/boston/stories/2007/11/05/story20.html?ana=from_rss

Troubled Tradex may be forced into bankruptcy
Boston Business Journal - by Jackie Noblett Journal staff

Investigators for the Swiss Federal Banking Commission have recommended the Swiss government place Tradex Swiss AG, a foreign exchange trading shop operating out of Boston, into bankruptcy, according to a report and sworn statements filed in Suffolk Superior Court.

The specter of bankruptcy places into jeopardy a suit by dozens of Massachusetts Tradex investors that would ensure their funds are returned in full before other investors and creditors divide the company's assets. There are roughly 1,600 investors in 60 countries who have alleged claims to Tradex funds, according to court records.

The report was filed Oct. 25 in response to an order by Superior Court Justice Allan van Gestel as part of a legal battle over Tradex funds frozen in two Boston banks. Portions of the report translated from German to English state that "the Tradex group is very likely overindebted, and in any event, insolvent and therefore not fully able to fully meet its presumed obligations in a timely manner."

Swiss investigators Peter Lutz and Romeo DaRugna state in the report that customers of Tradex claim at least $15.3 million in receivables, of which $5 million have been claimed in U.S. courts. The investigation further concludes Tradex's assets are only $7.1 million, with $5 million frozen in a Boston branch of Bank of America account and $500,000 held by Sovereign Bank.

The SFBC was scheduled to meet Wednesday or Thursday to discuss the future of Tradex Swiss AG and its sister company, Swiss Garant. An affidavit by Lutz states "it is my sincere belief that the SFBC will order the liquidation and bankruptcy of Tradex at its Oct. 31/Nov. 1 meeting."
A spokesman for the SFBC said that as of press time, the court had not made a ruling on the future of the two companies.

As reported previously, Tradex is being investigated in Massachusetts for allegations that it was not properly registered in the state, according to the office of Secretary of State William F. Galvin. Most recently, Tradex investors have written letters to Attorney General Martha Coakley seeking assistance retrieving their funds.

If the Swiss government places Tradex into bankruptcy, which would be domesticated in U.S. Bankruptcy Court in Massachusetts, the cases filed in Suffolk Superior Court by former Tradex employees and investors attempting to recoup their funds would be nullified, and investors would have to file claims in bankruptcy court, said Liam Floyd, a lawyer for former Tradex manager Craig Karlis, who is suing Tradex for back pay.

But Floyd said he is not confident in the figures provided by the Swiss investigators, who he says have not done due diligence in securing Tradex's files and trading platform.

In a letter dated Oct. 23 to the SFBC, Nicolaas Jansen van Rensberg, a Tradex owner and executive stripped of powers as Swiss investigators took over the company, says that the report by Lutz and DaRugna contains "massive calculation errors, completely ... inappropriate methods of calculation, baseless and inflammatory accusations, libelous slander, suppositions based on total negligent and wholly inadequate methods of investigation."

Evan Fray-Witzer, attorney for Lutz and DaRugna, did not return calls. Meanwhile, Tradex's investors say they are becoming increasingly frustrated with the lack of communication and are taking matters into their own hands.

"Personally, I don't know what's going on," said Jenny Zhan, a trader who is not a part of any investor suits. "Even people with attorney, they don't know."

Zhan said the group is split on whether to wait out the current legal battle or to take further action.
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forexsavior · Nov 20, 2007

Easy Forex looking for Easy Marks

Bad News for the folks over at Easy Forex. Not only are they below the $5 million capital requirement about to go into effect but now they are being sued by an angry customer who lost their shirt.

Of course, lawsuits from failed traders against forex brokers are a dime a dozen. But this case does not appear to be your ordinary frivolous lawsuit filed by some crank on a vendetta. Here are the details as reported in a major Israeli newspaper:

http://www.globes.co.il/serveen/globes/DocView.asp?did=1000276313&fid=1725

Suit alleges Easy Forex rewards brokers for client losses
Easy Forex: The plaintiff is a client who lost heavily; we don't want to judge him harshly.
Globes correspondent 19 Nov 07 09:55

A lawsuit has been filed against online foreign currency brokerage Easy Forex by one of its customers, alleging that the company paid its brokers incentives when investors lost money and fined them if they made a profit.

Easy Forex said in response that the customer had lost heavily, and it did not want to judge him harshly. It added that as part of its compliance with international standards, it warns customers, both orally and in its literature, of the risks inherent in foreign currency trading.

"All the allegations will be clarified in court," it said.

The claim followed a report on Channel 10 in which an Easy Forex broker was heard saying, "I had this evil grin on my face one day, when a client lost $35,000 in a quarter of an hour. A guy gets wiped out - I get my commission. A guy comes up a winner and turns a profit - I pay."
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What jumps out is the line from the Easy Forex broker who brags on television to a news reporter that "a guy gets wiped out - I get my commission. A guy comes up a winner and turns a profit - I pay." I have heard of market makers running amok and giving customers bad order execution for their own benefit but I have never heard of an introducing broker getting compensated only when their customers lose.

So I did some digging to try and find this video. Here it is in all its glory:
http://news.nana10.co.il/Article/?ArticleID=522850&TypeID=1&sid=126

Unfortunately, you need to speak Hebrew, which most of us don't. But a friend translated for me and the gist of the interview is that Easy Forex actually compensates these brokers everytime their customers LOSE money. Talk about being underhanded. Aren't introducing brokers usually compensated with a portion of the spread? Not here. Apparently these brokers would go into the religious community where the regulatory oversight is scant and get these guys to open accounts knowing they would get creamed.

Looks like all those critics of market makers have some new ammunition to fire away with in the great ECN vs. Market Maker debate.

By the way, beware forex brokers with evil grins...

MrAngry · Nov 23, 2007

Goldman took a 10% stake in CMC. Probably paid north of Â£100 million for it. That will change the way it attacks the US, I'm sure.

TradEStar · Nov 23, 2007

How about info on InterbankFX or ODL?

http://www.interbankfx.com/

http://www.odlsecurities.com/

I am thinking about setting up a Forex account at one of these brokers for an ATS system I have just completed backtesting with.

Paliz · Nov 23, 2007

Quote from TradEStar:

How about info on InterbankFX or ODL?

http://www.interbankfx.com/

http://www.odlsecurities.com/

I am thinking about setting up a Forex account at one of these brokers for an ATS system I have just completed backtesting with.
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If you look up both on the NFA website, you will see that they have had to be pay some serious fines recently.

So if the NFA thinks that they have done something wrong, then I would assume that Forexsavior will disapprove both brokers.....or will he??

Paliz · Nov 23, 2007

Quote from MrAngry:

Goldman took a 10% stake in CMC. Probably paid north of Â£100 million for it. That will change the way it attacks the US, I'm sure.
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Wow, a very smart move on behalf of CMC

TradEStar · Nov 23, 2007

In Forex can a person insure their account with a side company for deposits over $100,000? Is this what fund managers do when trading Forex with large account size?

TradEStar · Nov 23, 2007

Quote from Paliz:

If you look up both on the NFA website, you will see that they have had to be pay some serious fines recently.

So if the NFA thinks that they have done something wrong, then I would assume that Forexsavior will disapprove both brokers.....or will he??
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Yes I saw that..seems like the NFA is out on the hunt.

forexsavior · Nov 29, 2007

NFA Banishes ANTC

A few months ago PFG announced that it had purchased American National Trading Corporation.
http://www.pfgbest.com/about/press/ANTCPurchaseComplete.asp

However, that hasn't stopped the NFA from rubbing out its former executives in a ruling that has banished several former principals of ANTC to the futures equivalent of Siberia. Did PFG buy a pig in the poke?

Here is the NFA's decision:
http://www.nfa.futures.org/basicnet/Case.aspx?entityid=0219265&case=06BCC00034&contrib=NFA

On November 29, 2007, ANTC was permanently barred from NFA membership and from acting as a principal of an NFA Member. Varden was ordered to pay a $40,000 fine and Zummo and Roy were ordered to each pay a $20,000 fine. Varden and Zummo were each barred from acting as a principal of an NFA Member until May 11, 2009. If, after May 11, 2009, Varden or Zummo becomes a principal of an NFA Member, then during the time he is a principal of such Member, he will cause such Member to be subject to the enhanced supervisory requirements of NFA Compliance Rule 2-9. After a Member, of which Varden and/or Zummo is a principal, has been subject to the enhanced supervisory requirements of NFA Compliance Rule 2-9 for at least 18 months, then Varden and/or Zummo will be permitted to make an application with NFA's Waiver Committee for a waiver of the enhanced supervisory requirements with respect to such Member.
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What did they do? They were charged with "deceptive, misleading and high-pressure sales tactics." And "poor supervision." Eh, what else is new. Poorly capitalized firms that do a poor job supervising their employees are a dime a dozen as Easy Forex so amply demonstrated. Just more evidence for traders to beware poorly capitalized firms.