Are Your Funds Safe? NFA to Shut down small forex fcms

[forex savior]

Originally Posted by nabo

Thanks for the List .
But can u provide info on FXcast. Also , this Organization that will be closing down firms does it have power over firms all over the world, or does its power cover only the United States.

Hi Nabo, I have never heard of FXcast. I don't think they are a U.S. based firm. You have a web address?

[nabo]

dear Forex Saviour
What about the Organization ? I mean does it have power over all firms or is it only firms in the US that will be affected cause fxcast is not from the US?
My Box is nabo_1st@yahoo.com

[forex savior]

Originally Posted by nabo

dear Forex Saviour
What about the Organization ? I mean does it have power over all firms or is it only firms in the US that will be affected cause fxcast is not from the US?
My Box is nabo_1st@yahoo.com

NFA only has power over firms registered in america

[forex savior]

According to the most up to date CFTC Report on file for Hamilton Williams (dba Velocity4x) this firm's future is in grave doubt. Hamilton Williams only has $1,100,000 in adjusted net capital. That leaves them a scant 100 grand over the required adjusted net capital requirement. How dire is the financial situation over at Velocity? Dire enough that the NFA last spring charged Hamilton Williams with a bucketful of financial violations:

BASIC Case Summary
• C.R.2-10 - RECORDKEEPING FCMS/IBS
• F.R.SEC11(b)NEW - FDM TAKE CONCENTRATION CHARGE-UNAFFILIATED
• F.R.SEC11(a)NEW - FDM MAINTAIN ADJUSTED NET CAPITAL
• F.R.SEC12NEW - SECURITY DEPOSITS FOR FOREX TRANSACTIONS WITH FOREX DEALER MEMBERS

This is pretty serious stuff. This isn't like getting slapped with a fine for failing to put an asterisk on a marketing brochure. These allegations go right to the heart of whether or not Velocity4x is even viable as a company. Here are some statements from the NFA's Complaint:

"Hamilton failed to take the applicable concentration charge on transactions with unregulated counterparties. This failure resulted in the overstatement of Hamilton's net capital by over $275,000."

"Hamilton failed to maintain the required minimum adjusted net capital as of July 31, 2006."

"Hamilton was below its minimum adjusted net capital requirement from July 31, 2006, through September 4, 2006."

"Hamilton failed to collect and maintain the required security deposits as prescribed by NFA Financial Requirements Section 12(a)"

Wow. And these guys are going to be able to come up with $10 million two months from now? (Velocity offers 100:1 leverage which means they'll need $10 million MINIMUM to stay in business.) Where is this money going to come from? What venture capitalist is going to put his money into a company that has just been charged by the NFA with a whole host of bookkeeping violations that could get it shut down? I fear the future won't be bright enough for Hamilton Williams' execs to have to wear shades.

[forex savior]

The New Cap Numbers are out! With the exception of MB Trading (now at $5,190,000) there has been no indication from the poorly capitalized firms on this list that they are shoring up their financials in preparation for the big cap increase to $5 million due in just 6 weeks. In fact one firm, Direct Forex, is reporting that they are in violation of the minimum capital requirement by $276,000!

Meanwhile, the $10 million minimum capital requirement for firms offering 100:1 leverage is proving to be a big barrier as well. How that plays out remains to be seen. But things might really get wild in the forex industry the next couple of weeks.

The following firms, according to the latest CFTC Report, do not meet the coming $5 million requirement:
http://www.cftc.gov/files/tm/fcm/fcmdata0907.pdf

Direct Forex ($762,000)
IG Financial Markets ($1,017,000)
Advanced Markets ($1,216,000)
Wall Street Derivatives ($1,231,000)
SNC Investments ($1,301,000)
One World Capital ($1,408,000)
Hamilton Williams ($1,453,000)
CMC Markets ($2,001,000)
Solid Gold Financial ($2,101,000)
GFS Futures & Forex ($3,078,000)
E FX Options ($3,752,000)
Forex Club ($3,989,000)
Easy Forex ($4,351,000)

The clock is ticking. Are your funds safe?

[forex savior]

The Ten Million Dollar Capital Requirement affects ONLY those firms that trade at a margin level of greater than 100:1

So which firms in the Dead Pool are directly affected by this? Well, not many. IG index would be affected if they actually solicited customers in the U.S. but it appears their U.S. registration is just a shell. GFS Futures & Forex offers 200:1 mini accounts on their website. Thus this rule could have a major impact on their business. But the firm that stands to lose the most is Money Garden. MG Forex is notorious for offering 400:1 "Flex" accounts and this new rule could turn the firm upside down. Here is a quick rundown after looking at each firm's website.

IG Financial Markets ($1,017,000) [700 to 1 leverage]
Advanced Markets ($1,216,000) [100 to 1 leverage]
Wall Street Derivatives ($1,231,000) [Unknown]
SNC Investments ($1,301,000) [100 to 1 leverage]
One World Capital ($1,408,000) [100 to 1 leverage]
Hamilton Williams ($1,453,000) [100 to 1 leverage]
CMC Markets ($2,001,000) [100 to 1 leverage]
Solid Gold Financial ($2,101,000) [100 to 1 leverage]
GFS Futures & Forex ($3,078,000) [200 to 1 leverage]
E FX Options ($3,752,000) [100 to 1 leverage]
Forex Club ($3,989,000) [100 to 1 leverage]
Easy Forex ($4,351,000) [50 to 1 leverage]
Money Garden ($5,507,000) [400 to 1 leverage]
Ikon ($7,562,000) [Unknown]

[forex savior]

Looks like the Savior missed this big development. Gain Capital bought out Direct Forex. So scratch them from the list. Here is the official Direct Forex Statement:

Dear Direct Forex Customer,

As you already know, Direct Forex LLC (“Direct Forex”) will be transferring the custody and clearing of all forex accounts to Gain Capital on Wednesday, August 29th 2007. Please keep in mind that it is important to liquidate any positions by the close of business, 4:00PM (CDT) on the aforementioned date. All open positions will be liquidated to facilitate the transfer of the accounts to Gain Capital.

For your convenience, we have attached a link that allows you access to Gain Capital’s two proprietary trading platforms. These platforms can be accessed through Direct Forex’ website (www.directforex.com) and by clicking on the link http://www.directforex.com/products/demo1.aspx. Please take time to familiarize yourself with these new trading platforms in order to minimize any disruption to your trading.

Please keep in mind that Gain Capital is in the process of integrating MetaTrader 4, and is confident that the system will be available on or around October 1st, 2007. Direct Forex appreciates your business and will keep you informed of any updates.

Sincerely,
Direct Forex

[forex savior]

So imagine one fine morning you wake up feeling bright and chipper. You have your morning coffee and scrambled eggs while listening to the banality of the local weather report. You look across the tv screen and see the currency rates scroll by. Hmmm, time to log into your currency trading account to see how your positions look. You are still long USD/JPY where you are taking a beating, hoping the pair will make a come back. In the meantime at least you can console yourself with the interest rate yield you’re getting.

But not anymore. Because if you’re a customer of E-FX Options you are spitting out your coffee at your computer screen right about now. Why? Because without almost any notice E-FX is closing its doors and liquidating all customer positions in two weeks.

Now had you been reading Forex Savior’s reports all along and taken him seriously you could have closed your account months ago knowing E-FX was a poorly capitalized firm that was well below the coming $5 million capital requirement. But for those poor sods stuck in positions at this doomed firm you are about to get the margin call from hell. Meanwhile, the rest of E-FX’s customers can expect the worst trade execution imaginable from a firm about to slip beneath the waves. Run Forrest, Ruuuuuuuuun!

Dear Customer,

We regret to inform you that due to the restructuring of E-FX Options, LLC (“E-FX”), that the trading platform will cease service on 30 November 2007. Arrangements are further explained as follows:

Effective 30 November 2007 at 5:00 pm US Eastern Standard Time (1 December 6:00am Peking Time), E-FX will no longer be the counterparty to customer positions and will not service customer accounts.

All open positions will be liquidated at the closing price on that day and subsequently, the account will be closed. You may also liquidate your positions at any time on or before the close of 30 November 2007 via the platform, at a price for which you find suitable.

Fund withdrawal instructions may be provided to E-FX via the trading platform or by completing the Withdrawal Form on the firm web Site http://www.efxo.com/html/download/e/withdrawal.pdf

In the event that E-FX does not receive withdrawal instructions by December 1st, we will automatically deposit the remaining balance of your funds to the bank account registered with the company in your new account application. If E-FX does not have bank instructions as of 30 November, our customer service department will contact you.

For inquiries, please do not hesitate to contact our customer service manager Joey To at the hotlines listed below.

Lastly, account statements will remain available on the trading platform through 9 December 2007.

We apologize for any inconvenience brought about by the above arrangements!

Yours truly,
E-FX Options, LLC

I like how they "apologize" for any inconvenience. These firms are so irresponsible it spins the head. This firm knew months ago they were not going to be able to make the $5 million requirement and yet they didn't make the slightest effort to warn their customers ahead of time. They just wanted to milk the cow until the very last moment. Well, the cow is being taken to the slaughterhouse and its E-FX's customers that are about to become hamburger meat.

[forex savior]

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.
BASIC Case Summary

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

Here is a summary of the NFA’s 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.

This was the NFA’s 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.

I like that comment at the end, “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.”

Hmm, seems to me like the NFA is worried that One World isn’t 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 can…

[forex savior]

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!

Tradex Swiss AG - 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:

Troubled Tradex may be forced into bankruptcy - Boston Business Journal:

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.