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08-29-2007, 01:25 PM
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FXCM Comments on NFA Proposal
Meanwhile...
The rest of the industry is moving on to address the capital requirement issue. It's been commented on in the media, it's been commented on by numerous firms, it has spurred two mergers already. This issue is not going away and I'm glad to see a lot of the major FX firms going on the record as supporting this proposal. And this statement by FXCM is the strongest of any firm to date: NFA Proposal - FXCM Comment Dear Client, The Forex industry could be in for a major structural change — soon. This change has the potential to benefit Forex Capital Markets, LLC (“FXCM”); however, we believe many forex brokers may not survive. Our industry’s regulating agency, the National Futures Association (“NFA”), has proposed new financial requirements for every Forex Dealer Member (“FDM”). Spelled out in their “Request for Comments on Forex Proposals,” dated June 19, 2007, the NFA’s proposed requirements call for the following: • All FDMs must maintain at all times a net worth of $5 million; • Larger FDMs, particularly those that have a dealing desk, could potentially face net excess capital requirements significantly higher than the minimum under the proposed new rules; • Where appropriate, the NFA may require an FDM’s annual financial statement to be certified by an independent public accountant. FXCM’s current financial situation well exceeds NFA’s proposed requirements. As of June 30, 2007, FXCM has over $44 million in adjusted net capital, and for the last six years we have had our financial statements audited by an independent, certified public accounting firm. We believe the NFA is proposing these requirements because of the troubling number of insolvencies and near-insolvencies that have recently plagued the forex industry. According to the NFA: • In 2003, a Forex Dealer Member misappropriated almost $2 million in customer funds, driving the company into bankruptcy. (The CFTC is currently attempting to salvage some of the customers' funds.) • Since March of this year, eight different FDMs have fallen under the “early warning” requirement of $1.5 million. • More recently, NFA took a Member Responsibility Action ("MRA") against an FDM whose liabilities exceeded its assets by over $1 million. Industry-wide, there is now concern that some Forex Dealer Members may be unable to meet their financial obligations to customers in the event the increased capital requirements take effect. A review of the current net capital positions of the 43 Forex Dealer Members available on the following CFTC web page clearly demonstrates that this concern is justified. View CFTC Web Page As you can see from the financial data compiled by the CFTC, FXCM reports an adjusted net capital of over $44 million—far greater than the proposed financial requirement. Based on the most current available CFTC financial data, at least 22 FDMs would not be able to meet the new $5 million minimum net capital requirement. These firms are currently reporting net capital levels below $5 million. If the new capital level is imposed, these firms will either have to obtain more capital or close down. Because larger brokers may also face higher capital requirements, FXCM believes that several of these larger firms may also be unable to meet the new requirements, even though they presently have in excess of $5 million in adjusted net capital. In the event that some of these firms close down—or worse, are shut down by the NFA—we are concerned that customer funds, or at least their timely and orderly repayment, could be jeopardized. We realize that many forex traders have accounts with multiple forex brokers. That is why we advise you to make sure all your trading accounts are held at firms that are adequately capitalized. If you have an account with a possibly endangered firm, we believe, depending on when the NFA proposal takes effect, that the time may be fast approaching to consider moving those funds while the opportunity still exists. Our industry is changing, and the new proposed regulations are intended to put every FDM, and the industry itself, on a more secure financial footing. We welcome the NFA’s proposed changes because the effect will ultimately lead to clients trading through regulated brokers that are better capitalized or have access to greater financial resources. Please contact us if you have any questions regarding these changes. We look forward to serving you. Best regards, Sales & Client Services Forex Capital Markets, LLC Financial Square 32 Old Slip, 10th Floor New York , NY 10005 1-888-50-FOREX (36739) info@fxcm.com Forex | currency trading | forex trading | forex broker 
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08-29-2007, 02:10 PM
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FXCM regulatory history, is your money really safe with them ?
As I posted below, FXCM has had, and has some pretty serious regulatory actions bought against them by the NFA. I personally wouldnt go near any Forex Dealer Merchant that had been subject to regulatory action, let alone bought to book for violation of Rule C.R.2-36(b)(1). I've done a check and found the following 3 firms have not been subject of any regulatory action, and are the best capitalised.
GLOBAL FUTURES & FOREX LTD (Forex Trading: Online Currency Trading from Global Forex Trading) NFA Registration details and history OANDA ( http://fxtrade.oanda.com/ ) NFA Registration details and history FX SOLUTIONS LLC (FX Solutions - Simplified Forex Trading with Premier Forex Trading System) NFA Registration details and history Code:
COMPANY | Net capital| Required | Excess | Multiple GFT | 49,664,118 | 6,904,864 | 42,759,254 | 7.19x OANDA | 49,222,317 | 9,172,410 | 40,049,907 | 5.37 FX Solutions | 17,295,130 | 2,064,386 | 15,230,744 | 8.38
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08-29-2007, 03:32 PM
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FXCM Response
Quote:
On December 8th, the National Futures Association ("NFA") filed a complaint against FXCM. The NFA complaint alleges that certain promotional material used by FXCM and some of its Introducing Brokers was deficient. The NFA also cited FXCM for a single alleged deficiency in its anti-money laundering ("AML") compliance program. FXCM maintains comprehensive compliance and AML programs and has long since addressed all of the issues identified by the NFA in the complaint. We believe our firm has more staff and resources dedicated to compliance than all other Forex Dealer Members and most other Futures Commission Merchants. We have terminated hundreds of Introducing Brokers and turned away millions of dollars of potential business due to compliance related concerns. In light of our significant investment in compliance infrastructure and training, FXCM is troubled by the NFA's decision to bring this current complaint. Accordingly, FXCM will be exploring all options presently available to it, including litigation, to bring this matter to conclusion in a manner that gives proper acknowledgment to FXCM's integrity and the strength of our compliance program. The NFA complaint comes more than six months after the conclusion of a routine NFA on-site examination of FXCM, which itself lasted almost six months. During this examination, FXCM provided NFA with unrestricted access to thousands of documents, including complete records of all promotional material used by FXCM. These records of promotional material included access to websites and copies of all forms of advertising used by the firm such as web banner ads, web click ads, e-mails and print media. The NFA complaint identifies five instances where it alleges FXCM used deficient and misleading promotional material. Two of the examples cited by NFA are as follows: 1. "Whichever web site you use - FXCM or FXCM TR - you will be able to experience the same excellent order execution, price certainty and 24-hour support." 2. "Benefits of Forex Trading . . . Leverage up to 200 to 1" and "Benefits of Foreign Exchange Trading . . . Leverage up to 100 to 1." FXCM believes the statement in Example 1 above is true and not misleading. The statement suggests that regardless of which website a client chooses to use, FXCM's award winning trading platform will be the principal client interface providing pricing. FXCM also believes that the statements contained in Example 2 above are not deficient or misleading. The statements in Example 2 with respect to leverage appeared in an FXCM Trading Seminar PowerPoint presentation which contained a full page risk disclosure slide at the outset dedicated to the issue of leverage risk. The risk disclosure stated in part: "Leveraged foreign exchange and options trading carries a significant level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you." FXCM believes that the NFA's published interpretive guidance on leverage risk disclosure does not require repeated risk disclosures each and every time the availability of leverage as an account feature is mentioned in a single piece of promotional material. The NFA complaint also alleges marketing deficiencies on the websites of a small number of Introducing Brokers. As part of its compliance program, FXCM regularly monitors the websites and promotional material used by FXCM's hundreds of Introducing Brokers. Each week FXCM's compliance staff reviews hundreds of webpages and, while the process is not infallible, various types of deficiencies are routinely identified and then communicated to the Introducing Broker so that they can be corrected promptly. Several of the examples of alleged promotional material deficiencies identified by the NFA in its complaint had already been identified by FXCM's compliance staff through routine surveillance and were either in the process of being remedied or had been remedied prior to the conclusion of NFA's on-site examination. The NFA complaint also alleges that FXCM failed to establish and implement an adequate AML program. This allegation is especially unfortunate as the fact is that FXCM maintains a vigorous and comprehensive AML program. Under a provision of the USA Patriot Act and applicable federal regulations, FXCM submits its AML program to an independent, outside audit each year and has never been cited for any deficiencies in its AML program. The allegation contained in the NFA complaint with respect to the FXCM's AML program centers on the NFA's claim that FXCM failed to identify a small number of accounts from Nigeria as "high risk accounts." During the NFA's on-site examination of FXCM, we explained to the NFA managers that because FXCM already had in place a comprehensive, individual account review program, FXCM did not believe that its Nigerian accounts needed to be subject to additional due diligence as discussed in the Interpretive Notice to NFA Compliance Rule 2-9. We explained further that the Interpretive Notice to NFA Compliance Rule 2-9 clearly states that with respect to "high-risk" accounts the decision as to what "if any, additional monitoring of account activity is appropriate" is left up to the discretion of the individual firm. At no time has the NFA suggested or alleged that any money laundering took place at FXCM. The NFA has also not suggested or alleged that FXCM was required to perform any additional due diligence with respect to activity in these accounts. Rather, the NFA's sole allegation with respect to AML appears to be with respect to the how these accounts were designated or "coded" internally. We do not believe that a dispute over this single issue amounts to a failure by FXCM to "establish and implement" an adequate AML program. FXCM is committed to being the forex industry leader in compliance and adheres to the highest standards in carrying out all of its regulatory obligations. Please do not hesitate to contact us at compliance@fxcm.com if you have any further questions or concerns about this matter. Sincerely, David Waring Managing Director FX Business Development Forex Capital Markets LLC 32 Old Slip, 10th Floor New York, NY 10005 Tel (212) 897-7660 Fax (212) 897-7669 Email: dwaring@fxcm.com
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08-30-2007, 11:57 AM
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Beware David
Whipsaw has been attacking your firm at a number of other forums as well...
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08-30-2007, 11:58 AM
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Is Your Forex Dealer going to go out of Business?
That is the title of an article by John Jagerson over at PFXglobal:
Profiting with Forex (PFX) - Watch Forex Professionals Currency Trade The retail forex business is young and relatively unregulated but that won't last. I was surprised that the regulators have not moved faster in the U.S. when the Refco disaster occurred a few years ago but we are starting to see some action. What's coming down the pipeline might affect your dealer so do your homework and check them out. Because many forex dealers are headquartered in the U.S. they are subject to the NFA and the CFTC. Although registration requirements for FCMs (Futures Commission Merchants) have been loose in the past, they are tightening fast. There are two big changes coming down the pipe. The one I think retail traders should be aware of is the change to the net capitalization requirement. There is a minimum amount of cash (outside of customer accounts) that an FCM has to have to stay in business. That minimum used to be $250,000 then was recently raised to $1,000,000 and it is now going to be raised to $5,000,000 in the very near term. Did you know that if you are working with a dealer in the U.S. you can find out how much net capital they have? Just go the the CFTC's website and look up their financial data for FCMs. In fact, if you google "CFTC" it will give you a link right to the spreadsheet you want to look at. There is a bunch of other interesting goodies in that spreadsheet as well. The bottom line is that you should know whether your dealer can meet those requirements because if they can't your account could be tied up while they shut down their operations or raise capital. I realize most of us are working with large dealers but smaller boutique firms have a certain appeal and service levels that attracts a lot of traders. Just make sure you are not working with someone that is too small. Couldn't have said it better myself...
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08-30-2007, 03:21 PM
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Vindication
Many forum users have been asking for a specific link to the National Futures Association website so that they can read the proposal for themselves and hear it from the regulators themselves. Well, here it is:
National Futures Association | News Center As you can see the National Futures Association has spelled out clearly why they wish to raise the minimum capital requirement to $5 million. They apparently mailed out the formal proposal to the CFTC by Federal Express on August 17, 2007. So it looks like the NFA has fully signed off on the proposal. Now all that is required is the CFTC's approval. I would strongly encourage everyone to read through the NFA's reasoning for increasing the minimum capital requirement at this link here: National Futures Association | News Center Everyone will have their own quotes they will highlight. Here are the ones I found most interesting: "NFA received sixteen comments regarding the proposal. Eight commenters supported the increased capital requirement and eight opposed it." "The comment letters that opposed the proposal noted that it will likely eliminate a number of the smaller FDMs. These smaller FDMs will be, obviously, those with less capital. The comment letters in opposition also noted that more capital does not necessarily mean that an FDM is better able to support and properly operate its forex activities. While more capital does not necessarily correlate to "better" FDMs, more capital does mean that they will have, at a minimum, a greater financial stake in running their forex businesses." "One comment letter also noted that an FDM's risk-management and operational internal controls are more important than the amount of capital an FDM has. NFA agrees that an FDM's internal controls are important and, under separate cover, NFA is submitting for Commission approval a new rule to ensure that FDMs have proper internal controls." "Several FDMs pointed to the recent MRAs and receivership proceedings as evidence that the current regulations are working. Regulating solely by enforcement proceedings is not the best way to protect customers, however. One of these FDMs claims that staff was unfair in its characterization of the problem with FDMs and forex. Specifically, this FDM pointed out that the number of bankruptcies involving traditional FCMs and FDMs is the same, with two of each.5 What this FDM does not recognize, however, is that the two traditional FCM bankruptcies occurred over a seventeen-year history of regulation, while those for FDMs has occurred in only a little more than seven years. Moreover, the traditional FCM population has average around 250 while the FDM population has averaged around 40." All those critics who've been saying how "alarmist and irresponsible" my postings are now owe me an apology. The NFA itself is saying that the smaller firms opposed to the measure were telling the NFA the proposal could possibly eliminate themselves! That's right, some of the smaller firms in the Dead Pool we're telling regulators "you know this proposal could put us out of business." Yet when I say the same thing to the trading public the call goes out I'm "scare mongering." I'd love to know which firms opposed the rule and why they did. Wouldn't it be amusing to know which firms are right now telling their customers "nothing to worry about this rule won't have any effect on us" while they are pleading with regulators "please don't pass this or we could be forced to go out of business!" In any case the NFA has apparently brushed aside the dissenters. They have officially put the rule on the table and all it will now take is the CFTC's signature. Apologies will be accepted in the order they are received 
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09-03-2007, 11:38 AM
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Quote:
I have the answer - please open the attached thumbnail........... 
Last edited by tymen1; 09-03-2007 at 11:43 AM.
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09-04-2007, 02:47 PM
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On Tap for the Next Two Weeks
With the NFA officially hiking the minimum capital requirement to $5 million (http://www.nfa.futures.org/news/new...?ArticleID=1942) all eyes are now on the CFTC. Look for two things:
1) Some kind of formal statement by either the CFTC or the NFA in which CFTC signs off on the NFA proposal (or the unlikely prospect of the CFTC rejecting it.) 2) The new updated CFTC Adjusted Net Capital Report which will be published here: Financial Data for FCMs The next updated adjusted net capital report will be particularly revealing. All the firms on this report will have had several months since the proposal was issued to start increasing their reported net capital. While no firm is required to hike their capital yet it will be very telling to see which firms have begun to prepare for the inevitable and which firms continue to hold their cards close to their vest. At this point any firm that isn’t ponying up the dough to capitalize themselves on these reports is really begging the question: is this firm destined to be strapped into the forex dealer electric chair? Or will they get a stay of execution? My advice to the firms in the Dead Pool is simple: put up the money now and save everyone the trouble of guessing whether or not you will be here a few months from now. If your company capital is tied up and not available at the moment, well, tell the public what it is tied up in and specifically why you are not reporting it. Customers who open accounts with forex brokers are required to detail their own private financial holdings. In light of the seriousness of the capitalization issue, I think forex brokers should be held to the same standard.
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09-05-2007, 12:25 PM
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Currency Firms in Crisis
In the last few weeks I have reported on two poorly capitalized/unregulated forex broker dealers who are currently holding customer funds hostage. Well, both firms appear to be in complete chaos judging from what’s going around on various bulletin boards.
We’ll start with NFA regulated One World Capital. Their troubles started earlier this year when the NFA inspected their books and discovered they were not meeting their financial requirements. The NFA said at the time, “One World lacked an understanding of, or was inattentive to, regulatory requirements and was ill prepared to accept customer business as either an FDM or an FCM. The firm had not established adequate systems to enable it to handle customer funds or comply with customer reporting requirements." http://www.nfa.futures.org/basicnet/...17&contrib=NFA Since then One World has been losing staff and appears to be experiencing a severe cash crunch which has resulted in the halting of customer withdrawals, as detailed here: http://www.goldenmoneytree.com/foru...r=asc&start=100 At the same time that my Inbox has been piling up with messages from distraught One World Capital customers now a report has come out at Forex Factory that One World is revoking a whole series of rollover interest payments on GBP/JPY trades as well: http://www.forexfactory.com/showthr...700#post1576700 It came to my attention that 1World has resorted to dirty tactics in withholding profits/money from clients. Sometime ago, 1World gave $40 or so per day in Swaps for LONG GBPJPY. Traders who made money on this have their profits and money withheld (indefinitely?). I also noticed about 6 weeks ago that swap rate for GBPCHF was zero for both long and short. This was already reported at StrategyBuilderFX forum. Was these swap rate an error or a deliberate Trap? After reading the horror stories, I suspect its a trap meant to screw traders. How does this become a dirty ploy? Assume you traded GBPJPY, made money in the process with 1World. Later they come to you saying, "Hey Mr Trader, you made money from a wrong swap rates and we are disqualifying them all". This includes the swaps you collected as well as the PIPS you made and to include ALL OTHER TRADES made after these trades; if these GBPJPY trades were not made, you wont have money to make further trades.". Remember, GBPJPY was soaring in June/July and these traders made money from it by going Long GBPJPY.. There are two possibilities being played here: 1. 1World did not hedge your trades with an upper tier broker (1World traded vs you); you made money and they now rescind those trades. 2. 1World hedged your trades with an upper tier broker. However, 1world now claims YOUR profits. You dont earn swaps. you dont earn Pips. End of Story. The trap is for traders to make positions on those pairs; if you did and after further trading (even with other pairs) made money, they will go to your account and "cancel" your profits claiming, these could not take place so there is no profit made. Meanwhile, in Switzerland… Tradex Swiss Ag is still at war with itself apparently. The SFBC is fighting with the Tradex office in Boston over who has the right to talk to the customers of Tradex Swiss AG. Meanwhile the customers, who just want their money back, have no choice but to watch this farce from the sidelines. I have posted the two dueling press releases below. UN-BELIEVALBLE: From: Craig Karlis Service address: 100 Franklin Street Boston Massachusetts 02110 To: All clients of Tradex Swiss AG Date: 29 August 2007 Dear Clients Re: "Hostile take-over" of Tradex Swiss AG (Boston office) As most of you may be aware by now, Tradex Swiss AG is currently being investigated by the Swiss Federal Banking Commission (SFBC). This is not a criminal investigation but was ordered to determine whether Tradex Swiss AG needs a banking license in Switzerland to operate their business and structured products (please see the attached documents from the investigating trustees from Switzerland). As a precautionary measure, your funds in the Bank of America account of Tradex were frozen on 3 July 2007, by the Swiss authorities in an effort to protect your interests. If protecting your money constitutes a "hostile take-over" as described in the e-mail from the Swiss Management, headed by Mr Nic M Jansen van Rensburg before the Swiss authorities took control of the company, then we are guilty. Since the "freeze" of your money the former management of the Boston office has initiated a suit in a Massachusetts court and obtained an injunction to protect your money - resulting in an injunction that prevents your funds being moved to Switzerland, as well as preventing Bank of America from dispensing any funds without the knowledge of all the parties involved. All legal expenses are solely financed by the previous management of the Boston office while the management in Switzerland has not paid its employees or other operating expenses (infra-structure) of the Boston office since June. There was no "hostile take-over" by anyone in Boston and there are absolutely no direct or indirect relationship between Tradex Swiss AG and Boston Trading and Research LLC. The Swiss trustees were the ones who originally froze the account. I and the rest of the Boston management took the actions in court solely because they refused to inform any one in Boston as to the status of the accounts, and in fact would not communicate with us in any way. We have taken steps at our expense, to protect your interests and resolve your inconvenience, by getting your funds released and wired to you without delay. To satisfy yourself about the true facts of the situation, you may consider obtaining concrete evidence/proof of the following from the Swiss Management: • their efforts since 5 July 2007 to secure and get your money released, • their response to your withdrawal request; • the identity of their traders participating in their "capital guaranteed program"; • the opinion of the Swiss Federal Banking Commissions and other regulatory bodies about any guarantee of client funds, especially if it pertains to spot forex transactions (part of why the investigation was sanctioned); • payroll details for the Boston office employees for July and August; From myself and the former management of the Boston office of Tradex we can assure you of one thing only: We are doing everything within our power and the law to secure your funds in Bank of America and make sure it gets wired directly to you in terms of the Anti-money laundering regulations as soon as unfortunate matter is resolved. We have the "disadvantage" that we all live in Boston and have to make a living here. From the attached documents it is clear that the Swiss trustees, appointed by the SFBC, are currently in control of Tradex Swiss AG for the duration of their investigation. If you have any queries feel free to contact any of the Swiss trustees at Lutz Rechtsanwälte: contact or call them at Tel +41 44 560 8080 or Fax +41 44 560 8090 or e-mail to Peter Lutz peter.lutz@lawyerlutz.ch ; Romeo Da Rugna romeo.darugna@lawyerlutz.ch ; Michael Bopp michael.bopp@lawyerlutz.ch . Please accept our most sincere apology for the inconvenience cau sed by the continued transgressions of the SFBC prescriptions by the Swiss Management. In our opinion the best course of action would be to let the legal process, set in motion by myself and the Boston management, continue uninterrupted. I undertake to keep you up to date of any new developments or progress concerning our legal process against the Bank of America and Tradex Swiss AG. Yours Sincerely Craig Karlis The SFBC responded in kind: Memorandum Mandate: SFBC / Tradex and Swiss Garant Subject: Further information to clients of Tradex Swiss AG to: Clients of Tradex Swiss AG / file from: Dr Peter Lutz and Romeo Da Rugna Date: 3 September 2007 Dear Madam, dear Sir, we have informed earlier that the Swiss Federal Banking Commission (SFBC) has opened an investigation on Tradex Swiss AG ("Tradex"). The purpose of such investigation is to verify, whether the company has been conducting financial activities without the necessary homecountry licence. The SFBC terminated the signatory power of the former signatories of Tradex and appointed the undersigned Dr Peter Lutz and Romeo Da Rugna to carry out the investigation on behalf of the SFBC. The SFBC granted Dr Peter Lutz and Romeo Da Rugna the exclusive authority, with sole signatory power, to represent and act on behalf of Tradex. Further to our former information we can give you the following update about the pending investigation: We are at the moment not in a position to complete our investigation since part of the management of Tradex refuses to cooperate with the undersigned and do not deliver requested information and documents in a complete and timely manner. A part of the management of Tradex even filed a complaint against Tradex in Boston USA. Tradex therefore had to employ US counsel in order to defend this complaint which is seriously obstructing and delaying the pending investigation. Without the complete information and documentation about all assets and liabilities of Tradex, we are not able to determine which clients and/or creditors have legitimate claims towards Tradex. Therefore, lacking this information and documentation, we can not find out, and we consequently can not exclude, whether there is any risk of preferential treatment of creditors if now payments are made to individual clients and/or creditors. Until we do not have a complete overview on all of Tradex' assets and liabilities, we are therefore not in a position to make any transfer to clients and/or creditors of Tradex. We finally would like to inform that none of the messages which have been sent since 3 July 2007 by the management of Tradex have been authorised by the undersigned. Such messages and information therefore do not reflect the opinion of the undersigned. As soon as the investigation will be completed, you will receive further information. Yours sincerely DR PETER LUTZ AND ROMEO DA RUGNA Investigators appointed by the Swiss Federal Banking Commission If it is any consolation to the traders stuck in these two firms both the NFA and SFBC are making big changes to try and keep these kinds of things from happening again (NFA by raising capital requirements and SFBC by regulating forex in CHF.) As for everyone else, please conduct your due diligence and avoid poorly capitalized and/or unregulated firms for this is what can happen if you don’t.
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09-06-2007, 04:18 PM
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CFTC Prosecutes 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. On July 30, 2007, the Honorable Marcia G. Cooke, U.S. District Court Judge, issued a restraining order freezing the assets of Nations and prohibiting the defendant from destroying documents or denying CFTC staff access to books and records. The Court also froze the assets of relief defendants Sulaiman “Sal” Husain, a Director, Chief Financial Officer, and principal of Nations, and Sammy Joe Goldman, an owner and former principal of Nations. Husain and Goldman allegedly contributed to the undercapitalization—which ultimately rose to approximately $4.5 million—by withdrawing a total of $1 million from Nations’ accounts. On August 7, 2007, the court approved the appointing a receiver to marshal the assets of Nations. In the ongoing action, the CFTC seeks an order of permanent injunction against the defendant, monetary penalties, and other relief.
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