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

[forex savior]

Today is the day when the $5 million minimum capital requirement rule takes effect. News out of Money Garden is that they are dropping their high leverage accounts in order to comply with the new rule. That means no more 400:1 leverage from MG, or 200:1 for that matter.

The following firms have still not publically indicated they have met the requirement. Beware these firms until further notice:

1) SNC Investments: $1,152,000
They are well below the $5 million capital requirement. It is highly unlikely they will make the new requirement at this point. I advise customers to leave this firm and look for greener pastures.

Update: Just went to their website and there is no reference at all to being able to open an account with them. I suspect they are just going to be an introducing broker from now on.

2) Wall Street Derivatives: $1,228,000
This firm is based out of New Zealand and I'm not even sure they have any U.S. customers as their U.S. website is out of service.

3) Advanced Markets: $1,322,000
Amifx is already teetering on the brink as they are the subject of a business conduct committee case before the NFA in which they are cited for a whole host of financial violations including not meeting the old capital requirement. This firm does not have much of a future.

4) AlpariFX $2,481,000
Little known European firm. Well under the cap requirement.

5) Solid Gold Financial: $2,040,000
Solid Gold's future is now in serious doubt. Like many of the other firms on this list they have been charged by the NFA with failing to meet their existing capital requirement. When you can't meet the old requirement it stands to reason you won't be able to meet the new one either. Solid Gold is anything but a solid investment at this point.

6) Bacera Corporation: $2,300,000
Like a turd that won't flush Bacera Corporation just refuses to go down the drain. The Savior wrote Bacera off over the summer as sources knowledgeable about them stated they were going to close up shop. But no, they are still hustling the folks in LA for fresh deposits. In September Bacera settled a complaint with the NFA after it was discovered they were undercapitalized to the tune of $1.2 million. NFA reported Bacera only has about 200 customers as it is. But to those 200, do yourself a favor and get yourself another broker because sooner or later the pipes are gonna get cleaned and these guys are going to get flushed once and for all.

Update: They published their Holiday Trading Schedule on their website. So they apparently don't plan on closing their doors. Do they have the money? Is the CFTC going to raid the place after the Holidays? We'll soon find out.

7) ODL Securities: $2,566,000
Ravaged by undercapitalization issues.

8) Forex Club: $3,320,000
They still have not hit the minimum $5 million mark. And don't forget since they are a market maker they have other financial requirements to meet as well. They still haven't publically done so.

9) Easy Forex: $3,789,000
Under siege for their sleazy sales tactics, it's hard to imagine the NFA isn't going to drop the hammer on them soon.

So now what? Judging from the NFA's website it doesn't appear they will be moving in for the kill yet. In fact, it may not be until January that we find out who will survive and who will perish. So if you have any money at these at risk firms get it out now. And Merry Christmas everyone!

[uptick]

Originally Posted by forex savior

Big news people. The national futures association is going to shut down any firm that does not have at least $5 million in capital if the proposed capital requirement rule passes. This could get ugly folks. Is your firm big enough to make the cut? Most firms are poorly capitalized.

http://www.cftc.gov/files/tm/fcm/tmfcmdata0704.pdf

The rule should be decided in August. Make sure your funds are safe.

Thats good news. $5 million is nothing. You shouldn't be trading with a flimsy firm in the first place. That's my opinion.

Thumbs up to the NFA/CFTC.

[forex savior]

Fransesc Riverola is doing a top notch job at FX Street keeping traders up to date about the latest regulatory changes in Switzerland. He has sent out questionnaires to the Swim FX Broker community and several have responded, most recently Crown Forex who has stated they are applying for a banking license.
Forex Street Weblog: Open letter to FXstreet's Swiss brokers - Crown Forex S.A response

Crown Forex’s CEO was quoted as saying:

investors must be very careful when dealing with Swiss brokers that do not see the high importance of applying for a bank license. It is important to keep in mind that many small brokers will not be able to apply or even comply with the new regulations due to the huge financial requirements this type of license incurs.

BINGO. He is dead on. This is why I started the Swiss Dealer Dead Pool. The gig is up for the schlock shops in Switzerland. Either get a banking license or in the words of Der Terminator “GET OUT!” Firms will need to have a minimum $9 million in firm capital and meet a whole variety of accounting requirements in order to get a banking license.

The CEO of Crown Forex closed his remarks by saying:

As a result in the regulatory ordinances in Switzerland, very few Swiss brokers will remain in the game, if I may say so, by the end of 2009. Probably only 5 or 6 brokers will survive out of all the brokers, whether medium or small.

Here an updated Dead Pool for the trading public.

Firms that claim they are applying for a banking license
1) ACM
2) Fibo Group
3) Crown Forex
4) DukasCopy
5) MIGfx
6) GFX Group (forex.ch)

Firms that are fleeing Swiss Regulation
1) Masterforex. Their business office is listed in Switzerland but they are registered in the Seychelles and have stated they do not need to get a banking license.
2) forex-swiss. FXCH, despite the fact they are NAMED "Forex Swiss" claim registration in Dominica. This is an odd company that has claimed multiple office addresses over the years including, Switzerland, Austria, South Africa, Iran, and the United States. Today they are claiming they have offices in Dominica and the United Kingdom. Tomorrow who knows, they could claim a mailing address in Tibet. Beware this firm.
3) Prime4X. Their head office is in Switzerland but they have stated they are applying for a license in Cyprus.

Firms that are no longer accepting customers or have been shutdown
1) WestCapFX
2) Tradex Swiss AG
3) Finex
4) Aleccohfx

Firms that refuse to comment
1) Swiss Direkt
2) Tadawulfx
3) Advised Trading

As always conduct your due diligence and make sure the firm you trade with is regulated and legit.

[forex savior]

According to the Washington Post Bush will still veto the farm bill. However, the veto will not be sustained in Congress.
washingtonpost.com

Senate Passes Farm Bill, But Bush Still Plans Veto

President Bush will now follow the lead of the late Dwight Eisenhower by vetoing a comprehensive farm bill.

Bush, though, is no Eisenhower.

On Thursday, the Senate, by a comfortably veto-proof margin of 81 to 15, approved a farm bill that now faces a resistant White House. Bush says he will veto the five-year package, much as Eisenhower nixed a big farm bill in April 1956.

Eisenhower won his showdown, the last time a president vetoed a major, standalone farm bill. Bush, however, will lose. The House and Senate now have both approved the farm bill by more than the two-thirds vote needed to override a veto.

"Mr. President, you and your people have been at the table for more than a year," Sen. Larry Craig (R-Idaho) declared. "It's time you recognize the value of this project."
Craig was one of 35 Republican senators to abandon Bush on Thursday and support the farm bill. On Wednesday, 91 GOP House members voted for the bill, boosting the House's approval to a veto-proof margin of 318 to 106.

Sen. John McCain (Ariz.), the Republicans' presumptive presidential candidate, missed the vote but said he opposes the bill. Democratic Sens. Hillary Clinton (N.Y.) and Barack Obama (Ill.) both support the bill, but they likewise missed the vote.

[uptick]

thx for keeping us up to date.

[forex savior]

You didn’t think the Savior would forget such criminal masterminds as Robert Gray or overlook the smooth talking shysters hustling and bamboozling the public at places such as Easy Forex or FX Open did you? On with the show…

1) Forex Bastard’s Babe Bound for Big House
The sordid tale of Forex Bastard (aka Dmitri Chavkerov) and his mistress from Russia captivated the forex world after it was learned she actually got her golden ticket to America in a sham marriage that the Bastard himself presided over!
Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool

2) Dirty Rotten Scoundrel
The collapse of Forex Liquidity is perhaps the greatest con job ever committed in retail forex. It involved the forging of a fake bond valued at almost $40 million. This fake bond was used by FXLQ to fulfill their net capital requirement and for months they got away with it. Eventually the hoax was uncovered and FXLQ was shuttered by regulators and forced into bankruptcy:
Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool
Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool
Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool

But digging deeper one finds that Robert Gray has a long history of malfeasance in the forex industry.
Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool
Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool

He has worked at over a half dozen different forex dealers just in this decade alone hopping from firm to firm (sometimes stealing the previous firm’s clients on his way out the door) always hustling, always scheming. Today Gray finds himself in deep legal manure but he’ll get no help from the forex community that has come to loathe him as this Irish ballad can attest to:

I read at one of these links that Robert Gray has an Irish passport and that if things ever get too rough he can always hop on Aer Lingus and live out his days shepherding sheep on a quiet farm outside Galway. Well, should that day come I'm sure the forex trading community will sing in unison:

Oh Robbie Boy, the pipes, the pipes are calling
From glen to glen, and down the mountainside.
The summer's gone, and all the flowers are dying.
'Tis you, 'tis you must go and we gladly say goodbye.

But come ye not back when summer's in the meadow
Or when the valley's hushed and white with snow,
'Tis we'll dread you be there in sunshine or in shadow.
Oh Robbie Boy, Oh Robbie Boy, we loathe you so...

3) The Running Man
These posts detailed the antics of Mr. Ryan Nettles who cut a Genghis Khan like swath through the forex industry. His war with Craig Karlis of Tradex Swiss AG fame became grist for the forex tabloids. He then treated the NFA with equal contempt when another one of his firms (Tradeco) went down the toilet in the summer of 2007. Last he was heard hawking his Weekend at Bernie’s like dead corpse of a company, Finex, to the poor sods at Varengold. Someone sign this man up for the 400 meter relay at the Olympics!
Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool
Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool

4) Metatrader Misery
“What happens when a business deal goes bad? You get bitterness, recriminations, machinations and vows to get even. This appears to be what happened after Poltek FX and FX Open parted company.”

Such is the opening to two investigative pieces I did on the broker war between Poltek FX and FX Open. This bloody civil war spilled over into numerous bulletin boards as each side released damaging information about the other in an attempt to discredit one another. In the end they both wound up deeply discredited themselves.

These posts also detailed how risky some of these small metatrader brokers are. There isn’t a shred of transparency with these firms and it is impossible to do any kind of background check on them because they are not regulated and won’t even tell you where they are based or who owns the company. It is a leap into the dark that too many traders have been eager to take.
Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool
Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool

5) Shark Hunting in the Caribbean
This post told the story of Mitch Vazquez and the gang at GCI who were closed down by the CFTC in 2002 only to emerge from the ocean like Jaws himself and start circling the waters off the coast of Belize, in defiance of the very court settlement Vazquez had apparently agreed to. Oh by the way this deadly man-eating squalus is also known to inhabit the lakes of Switzerland in the guise of Forex.CH. Swimmers beware.
Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool

6) Easy Forex Exposed
Back in November of 2007 the Israeli media was running stories on the sales practices of Easy Forex. Quoted in one report was an Easy Forex solicitor who said “I had this evil grin on my face one day, when a client lost $35,000 in a quarter of an hour. A guy gets wiped out - I get my commission. A guy comes up a winner and turns a profit - I pay."
Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool

A lawsuit is pending in an Israeli court but when television crews are quoting former salesmen taking glee in their clients losing their shirts the trading public shouldn’t be too worried regarding the judge’s ruling. Stay away from these guys!

Last month some ex-traders put even more heat on Easy Forex claiming all sorts of irregularities including tales about Easy Forex’s “Net Deposit Method.” A must read for anyone concerned about the dealing and sales methods of market makers.
Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool


Two Volumes down, with more to come I’m sure. There is still a lot of mucking out to do in the FX Barnyard and there is still a lot of time to pass until the CFTC comes out with its new rules. In short, there is still much to be written. And so it shall be.

[Tom Harris]

Hi Babypips
This is my 1st day to join the forum & start sharing but I found that there is no other solution.
I have an account with FXCM but today I found in my statement another name of another broker called sigmaforex.
I asked FXCM through the chatting with them but there is no direct answer
I searched for them & I asked some friends but some told me that there is no any relations & others said that sigmaforex money manager for FXCM.
I'm afraid. Is there any answer here?

[forex savior]

It’s hard to know what to believe about Olint these days with newspaper headlines like this “David Smith Alive and Kicking” courtesy of the Jamaica Observer:
'David Smith alive and kicking' - JAMAICAOBSERVER.COM

POLICE in the Turks and Caicos Islands yesterday dismissed rumours that head of beleaguered investment club Olint, David Smith, had attempted to commit suicide by taking a drug overdose.

"He is alive and kicking as far as I know," Sergeant Calvin Chase of the Turks and Caicos police force told the Observer. "We have no such information and I am certainly not aware of it."

So where did these “rumours” come from? Who knows. So much about this Olint case is cloaked in secrecy. An email is leaked by an unknown source purportedly written by Smith stating the fund is a shambles forcing Smith to deny it. But later in the week Smith’s own lawyer hints that the email was in fact legit:
OLINT Crash - Email Very Genuine(with letter) « Real Investments For Life

Earlier this week Jamaican radio reported that Olint’s accounts at brokers like FXCM, Oanda and FX Solutions have been frozen and that David Smith is being investigated by the Department of Justice for possible money laundering (although none of these firms has gone on the record stating they even have any David Smith accounts at their firms, possibly because of client confidentiality agreements.)

And Government officials in the Turks and Caicos remain tight lipped and unwilling to shed any light on David Smith’s now defunct operation. In such an environment “rumours” will take hold. It is time someone in authority in Jamaica or the Turks and Caicos step forward and tell us all what the hell is going on.

[forex savior]

The NFA is on the march. This week they announced that all Forex Dealer Members must meet the first capital benchmark of $10 million by October 31st:
National Futures Association | News Center

On July 17, 2008, NFA's Executive Committee recommended that NFA's Board of Directors approve revisions to NFA Financial Requirements Section 11 to implement the increased capital requirements called for under the Reauthorization Act. Under these revisions, Forex Dealer Members will be required to maintain adjusted net capital equal to or in excess of $10 million as of October 31, 2008, $15 million as of January 17, 2009, and $20 million as of May 16, 2009. NFA staff expects that the Board of Directors will adopt these revisions at its meeting on August 21, 2008 and that the Commission will approve them shortly thereafter. We are providing advanced notice of the increase in capital requirements to give Forex Dealer Members sufficient time to make arrangements to come into compliance.

In addition to the increase in the required minimum capital, the Executive Committee also recommended that the Board of Directors approve revisions to NFA Financial Requirements Section 12 regarding the collection of security deposits. Section 12(a) requires that Forex Dealer Members collect and maintain minimum security deposits of either 1% or 4% of the notional value of each forex transaction, depending on the currency. Section 12(b) provides an exemption from this requirement for those Members that consistently maintain at least twice the required adjusted net capital. The revised rule would provide that a Forex Dealer Member that consistently maintains 150% of the required adjusted net capital would be exempt from having to collect the prescribed security deposits. As with the capital requirements, NFA staff anticipates this revision also becoming effective on October 31.

How does you firm stack up?

The following firms have net capital below $10 million

Advanced Markets $5,017,000
Bacera $5,387,000
MG Financial $6,001,000
Forex Club $7,380,000
Hotspot $7,843,000
Friedberg Mercantile $8,167,000
CMC $8,426,000
Ikon $8,462,000
MB Trading $8,660,000
Easy Forex $8,662,000
IFX $9,141,000

In particular you will notice that three firms are far below the upcoming increase to $10 million. Advanced Markets, Bacera and Money Garden. In fact, they are struggling just to meet the current $5 million net capital requirement with Advanced Markets a scant $17,000 above the current law. That kind of capitalization does not inspire much confidence and traders really need to beware doing business with them.

The following firms have net capital below $20 million

GFS Forex $10,829,000
Alpari $11, 668,000
ODL $15,182,000
I Trade FX $15,828,000
FX Solutions $18,088,000
CMS Forex $19,306,000

The following firms have net capital above $20 million

PFG $20,275,000
Interbank FX $22,980,000
Gain Capital $44,293,000
GFT Forex $58,304,000
FXCM $70,794,000
Oanda $164,256,000

As always conduct your due diligence and make sure the firm you are trading with will be able to comply with the new law.

[forex savior]

Last week Bacera officially closed their U.S. office and are no longer servicing U.S. customers. It was always a long shot that they would be able to meet the increased capital requirement to $20 million so this closure comes as no surprise.

But they still plan on doing business outside the NFA’s purview and are accepting customers from outside the United States. Bacera has several offices in China and most of their customers are Chinese. Will this become a trend with firms that can’t meet the upcoming adjusted net capital increase?

Here are the remaining firms that are still reporting Adjusted Net Capital below $10 million. If these firms are unable to increase their adjusted net capital to $10 million by the end of the month they too will have to close up shop in the U.S. Most of them should be able to do so as some, like HotSpot, have huge parent companies with ample financial reserves. But others like MG and Forex Club are in a very tough position.

Financial Data for FCMs

MG Financial $5,545,000
Forex Club $6,709,000
Advanced Markets $6,874,000
Hotspot $7,573,000
Ikon $8,088,000
Friedberg Mercantile $8,176,000
ACM $8,395,000
Easy Forex $9,630,000