[forex savior]

Forex Dealer Dead Pool member GFS Forex has run into a bit of trouble in the Middle East. Their Dubai office was recently shut down by regulators and they were hit with $500,000 in fines and plaintiff compensation. It wasn’t always this way for GFS.

Back in 2007 this “leader in the online global foreign exchange and futures market” was trumpeting its new office with the usual public relations talking points as seen in this article (with accompanying photograph of glad handing executives):
GFS Investments opens office at DIFC | DIFC

From its offices in the DIFC, GFS will work to bring its expertise in the foreign exchange market to its customers throughout the region.

GFS has established a reputation as a global leader in commodities trading.

Mike Leung, Director, GFS Investments (Middle East) Ltd., said: 'We are extremely proud to join the DIFC, the leading international financial centre in the region. Working in the DIFC will allow us to provide our customers throughout the Middle East access to our foreign exchange and commodities market expertise from a platform that is internationally recognised for its integrity, transparency and efficiency.'

Integrity eh? Let’s see how accurate that claim turned out to be:
http://www.business24-7.ae/articles/...bc0a4fa3f.aspx

GFS broke the terms of its licence by placing foreign exchange trades on behalf of its clients when the company was allowed only to offer a platform for customers to place trades, according to the DFSA statement.

The trading on behalf of clients was often "unfair and unsuitable to the interests of the clients, motivated more by a desire to maximise commissions than to profit the clients," the DFSA said. "Most clients suffered financial losses as a result of this misconduct."

Well when you are $10,000,000 below the $20,000,000 capital requirement scheduled to kick in next spring you’d try to “maximise” your commissions too. GFS has a long, hard slog in front of it.

Authority suspends GFS Investments
By Babu Das Augustine, Banking Editor
Published: September 08, 2008, 00:03

Dubai: The Dubai Financial Services Authority (DFSA) on Sunday slapped hefty fines and sanctions on GFS Investments (Middle East) Limited, a company that offered online trading facilities in foreign exchange and commodities.

The DFSA's action follows a detailed investigation into the business operations of GFS Investments.

GFS Investments is licensed to provide an online foreign exchange and commodities trading facility to clients who meet DFSA's required eligibility standards. Eligible investors gain direct access to that platform via unique login and password.

Under its licence, GFS Investments was not permitted to conduct the trades, but received commissions for each trade carried out by its customers. The business is therefore suitable for professional investors who have relevant market experience, but unsuitable for retail investors.

An affected customer told Gulf News yesterday that the company used different customer accounts to carry out trades for customers who were not eligible under DFSA regulations.

"The investigations determined that GFS Investments had operated outside its authorisation by conducting business with non-eligible retail clients and by itself carrying out trading in the names of clients. The DFSA took immediate steps to ensure that no further unlawful trading took place," DFSA said in a statement.

Investigation revealed that some employees of GFS Investments engaged in conduct designed to misrepresent the eligibility of clients, including the falsification of client particulars.

Following investigations, the DFSA has imposed a range of sanctions including the banning of relevant individuals for five years from the Dubai International Financial Centre (DIFC); the imposition of fines; and the compensation of relevant clients for financial losses suffered as a result of the misconduct.

"The DFSA has an important role to maintain business standards within the DIFC. The vast majority of our licensed firms take their governance and compliance responsibilities very seriously and this has helped the DIFC to quickly establish a reputation for excellence.

"We are, therefore, disappointed by the unacceptable conduct of GFS Investments," said the DFSA's Chief Executive, David Knott.

"The DFSA's intervention will also ensure that all investors who suffered financial loss as a result of the misconduct will be fully compensated," he said.

The bans imposed by DFSA prevent the individuals from performing any function in or in connection with the provision of financial services or ancillary services in or from the Dubai International Financial Centre during the designated period.

All sanctions have been recorded in enforceable undertakings made with the DFSA by GFS Investments and its relevant officers and employees.