With all these bogus claims from small time brokers claiming they are regulated because they hold a �certificate� they managed to pull out of a cereal box it is hard to know what to believe these days when a firm states they are �licensed.�
And perhaps no firm straddles the line between licensed and unregulated more than a firm by the name of GCI Financial. A reader asked me to provide some background on GCI recently and after doing a quick Internet search I found myself once again swimming in the deepest, darkest, murkiest depths of the Forex Ocean in search of that most dangerous dorsal finned predator of all- the offshore FX boiler-room.
GCI appears to have been started back in the 1990�s and used to be a U.S. based company with its CEO, Mitch Vasquez, living in Wilton, CT. It didn�t take too many clicks of the mouse to discover that GCI had been busted by the CFTC under the headline �CFTC CRACKS DOWN ON FOREIGN CURRENCY SCAMS NATIONWIDE.�
CFTC Press Release 4611-02
The complaint itself charged GCI for violating the Commodity Exchange Act. In short, the CFTC was taking GCI to court because they had not registered with the NFA (Hello FXDD! This could someday happen to you!)
Also cited in this lawsuit was Vazquez. In 2002, Vazquez and GCI settled the suit and as part of the settlement Vazquez paid a $100,000 fine and agreed to
�for a period of three years, not to act in any capacity or affiliate in any way with any individual or entity which involves the solicitation, acceptance of orders, transmissions of orders, execution, advice related to, pooling of funds, or recommendation for or of futures contracts, options on futures contracts, or options on foreign currency either (i) for or on behalf of any U.S. citizen or U.S. resident, regardless of where cleared or conducted; or (ii) that are cleared or conducted in the U.S., whether on or off-exchange, regardless of the citizenship or residency of the parties.
Sounds pretty clear to me. Basically, Vazquez and GCI were expected to close their doors and get out of the FX business.
But apparently GCI didn�t see it that way. Instead, they submerged beneath the water and headed to Belize. Well at least their �State of the Art� dealing room fled to Belize. But Vazquez doesn�t appear to have gone anywhere as a FEC filing showed he contributed $2000 to George Bush�s Presidential Campaign in 2004 where he listed an address in New Canaan, CT.
MITCHELL VAZQUEZ Donations – Huffington Post
Meanwhile in Switzerland (cue up Jaws music)�
According to the gossip on the bulletin boards Vazquez had apparently branched out into the notorious Swiss Market. Rumor has it that GCI and GFX (Forex.CH) are the same firm. This was news to me. But several people have stated that Vazquez is also a director at GFX and also points out that the websites of GCI and GFX are remarkably similar and also housed on the same servers?
Forums - GFX Group SA - anyone has experience?
GFX Group SA
GFX Group Reviews | GFX Group forex Ratings | gfxsa.com reviews and ratings by Forex Peace Army
Also, it appears that GFX has recently gotten into some trouble with the Swiss Government according to one trader who cited this (translation welcome if anyone speaks Francais):
Renseignements internet du Registre du Commerce
As for GCI, it claims registration in Belize and you can actually verify they are in fact licensed by the regulatory authorities there:
ABOUT IFSC - International Financial Services Commission
Strangely, GCI doesn�t provide this link on their website which would allow traders to verify this independently which I just did as the Savior is nothing if not fair and balanced.
The reason GCI may be quiet about their regulatory status with Belize officials is because the IFSC does not actually do much aside from collect fees and provide �guidelines� to businesses. In fact, they state on their own website:
ABOUT IFSC - International Financial Services Commission
�The Commission relies on self-regulation, meaning that while government sets overall standards, it expects much of the actual work in terms of monitoring and compliance to be done by the industry itself.�
Bwahahaha! As if a forex firm that has been driven out of the United States for being a �scam� is going to properly �self-regulate� itself. This tells you about all you need to know about the quality of Belize regulation.
So what should traders take from all this? Common sense would dictate that traders avoid GCI. Their compliance history is poor and their current regulators in Belize clearly don�t give a damn what they do so long as they pay their bills on time. At the end of the day GCI is just another shark in the water. Here�s hoping someone harpoons them and sends them to the bottom of the ocean from whence they can never be dredged up again.