[forex savior]

I hate to say I told you so, but, I told you so. Nations LLC has posted on their website that they are officially bankrupt and that “it does not appear likely that there will be sufficient funds to pay all claims of creditors and customers in full.” This is precisely what I have been warning about. When you trade with a poorly capitalized firm you are at much greater risk of losing your money because in the forex industry poorly capitalized firms have a terrible track record (this year alone over a dozen have gone out of business.) This is precisely why the NFA has raised capital requirements to $5 million. And as with One World Capital I put out a warning on Nations well before they started taking customer funds hostage.

Here is what I said on July 19, 2007:

“The order holds Labell and WWF (Worldwide Forex) jointly and severally liable to pay WWF's customers restitution in the following amounts: WWF $3.1 million and Labell $1.5 million. The order also imposes civil monetary penalties of $126,000 against Labell and $3.1 million against WWF. Finally, the order permanently prohibits defendants from engaging, directly or indirectly, in any commodity-related activity.”

http://www.cftc.gov/opa/enf07/opa5341-07.htm

End of story right? Not in the domestic retail forex industry where the shysters rise from the grave like the flesh eating zombies from 28 days later. Nope, what really makes this story juicy is the fact that refugees from Worldwide apparently migrated over to another firm, a dead forex firm walking, by the name of Nations Investments LLC. ($1,699,000 in net capital).

BASIC Details

In fact, Nations even has the same address as did Worldwide!

1700 NW 64TH ST. SUITE 100

FT. LAUDERDALE, FL 33309

Anyone want to make odds on how long it will be before Nations gets shuttered? Perhaps the folks over at Intrade can add a dead forex firms expiration date contract to their prediction market. If so, I’m going long on Nations going under. And I ain’t worried about a margin call…

Then on July 24, 2007 the NFA closed Nations:

So what happened at Nations? Why was the NFA forced to take an "emergency Action" and shut them down? Well, because it was basically one of the industry's worst nightmares come true. An undercapitalized firm suffered massive losses and was forced to cover them with customer funds. Here is what the emergency action states:

"On Saturday, July 21, 2007, Nations sent to NFA, via e-mail, notice that it had fallen under the minimum required adjusted net capital."

On Monday, July 23, 2007, NFA sent a letter to Nations notifying the firm that as it was unable to demonstrate compliance with the minimum requirements Nations was to cease doing business. That same day, NFA received another notice from Nations representing that the firm had fallen under the required minimum "due to losses in the forex markets." This letter also indicated that Nations was attempting to raise $5 million "to make customers whole." (YIKES! "make customers whole?!" Who on Earth is going to give Nations $5 million?! While nations has been successful at making a fool of their customers they certainly won't be making them whole.)

Nations also provided NFA with a Form 1-FR as of July 20, 2007, which indicates that Nations owes customers trading in on-exchange futures more than $3 million and customers trading Forex more than $5 million. (Wow. What an implosion. They are $8 million in the hole? What the hell were they doing over there going to Vegas and playing craps with customer funds?)

This looks like another messy court case. With financials like this I expect the creditors will be coming out of the woodwork laying claim to what's left of Nations. If they're lucky they might be able to seize a fax machine or two, but as for customer funds, well, looks like some stripper in Vegas got her hands on that money first...

On September 6, 2007 the CFTC then Dropped the Hammer on Nations:

In July I put out an alert to the FX Community about Dead Pool Member Nations Investments, LLC. Well, shortly there after the NFA went in and closed them down. Now it appears the CFTC has stepped in to collect their pound of flesh. Nations was hauled into court by the scruff of their neck by the Feds and a court receiver has now taken over the defunct firm. Have customers lost money? I'll keep everyone informed.

U.S. Commodity Futures Trading Commission Files Action Against Futures Commission Merchant Nations Investments, LLC, for Failure to Maintain the Minimum Amount of Net Capital Required by Federal Law

U.S. Commodity Futures Trading Commission Files Action Against Futures Commission Merchant Nations Investments, LLC, for Failure to Maintain the Minimum Amount of Net Capital Required by Federal Law

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced today the filing of a complaint in the U.S. District Court for the Southern District of Florida against Nations Investments, LLC (Nations) of Fort Lauderdale, Florida, a futures commission merchant (FCM) registered with the CFTC.

The complaint alleges violations of the minimum net capital requirements of the Commodity Exchange Act and Commission regulations. More specifically, according to the CFTC complaint, as of July 21, 2007, and perhaps earlier, Nations’ net capitalization was below the adjusted net capital required by the Act and a Commission regulation. As of July 20, 2007, the complaint charges, Nations’ adjusted net capitalization remained below the required adjusted net capital with Nations’ total liabilities equaling $5 million while its assets were less than $2 million.

This week this statement appeared on Nations Website
Nations Investments

Notice to Customers and Creditors of Nations Investments, LLC

On July 24, 2007, the National Futures Association ('NFA') issued a Member Responsibility Action against Nations Investments, LLC ('Nations' or the 'Company'), which among other things, directed the Company to close all open positions of forex account customers by July 25, 2007 at 5:00 p.m. (EDT). At the same time, the NFA authorized the bulk transfer by the Company of all the accounts of its on-exchange customers to Open E Cry, LLC, another Futures Commission Merchant. Accordingly, this Notice (and the administration of the receivership) is primarily for the benefit of the former Nations forex customers. (Former Nations on-exchange commodities account customers may contact Emily Stephens concerning their account at Open E Cry, LLC, telephone: (800) 920-5808.)

On July 30, 2007, the Commodity Futures Trading Commission ('CFTC') filed a Complaint against Nations in the United States District Court for the Southern District of Florida (the 'Court'). On August 7, 2007, the Court entered an Order pursuant to which the Court appointed Bruce H. Matson as Receiver for the Company and its assets. A copy of the Order can be viewed on this website.

The Receiver currently is attempting to determine the extent of the customer account balances and the other liabilities of the Company. He has taken possession and control of the assets and records of the Company. The Receiver also is attempting to identify what additional assets may be available to make payment to customers and creditors. The goal of this process is to (i) identify accurately all of the unpaid account balances of the Company's customers as of July 25, 2007, (ii) identify all other creditor claims, (iii) identify and collect any and all assets of the Company (including the possibility of asset recovery actions against third parties), (iv) distribute monies recovered pro rata to customers and creditors; and (v) provide the Court with a final accounting of the Receiver's activities. The Receiver is making every effort to seek cost efficient avenues to recover assets for the receivership and complete the claims process. The claims process, however, requires the identification of customers (and other creditors) and a determination of the validity and amount of their claims. This process is likely to take a number of months. If appropriate the Receiver will consider making an interim distribution to customers and other creditors. Customers also should be advised that, at the present time, it does not appear likely that there will be sufficient funds to pay all claims of creditors and customers in full. The CFTC complaint states that there are in excess of $5 million of customer liabilities and less than $2 million of cash assets remaining. Although it is much too early to predict, the recovery for customers may well be less than fifty percent (50%) of account balances as of July 25, 2007.

The Court directed the Receiver to file a report sixty (60) days from entry of the Order, the first to be filed by October 8, 2007. At that time, the Receiver will provide access to that report on this website. Finally, customers and creditors should refer back to this website from time to time for any updates.

Specific inquiries should be directed to the Receiver, Bruce H. Matson at LeClair Ryan at (804) 343-4090 or to Katherine M. Mueller at (804) 916-7117.

Real people have lost real money, not because they took trading losses but because they invested their money in a firm that was poorly capitalized. Don’t make the same mistake they did. Don’t trade with a poorly capitalized firm.