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06-26-2007, 10:48 PM
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Are Your Funds Safe? NFA to Shut down small forex fcms
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. Last edited by forex savior; 08-15-2007 at 09:26 PM. Reason: corrections regarding rule 
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06-27-2007, 01:20 AM
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I don't see any reports on the CFTC website on any broker shutdowns. Can you please provide a link to the report?? thanks
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08-06-2007, 12:15 PM
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08-06-2007, 12:16 PM
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The Case of CFG
I have spent a lot of time discussing the issue of forex fraud and how this has been one of the motivating factors driving the regulators' desire to raise capital requirements. But the issue of broker dealer insolvency is in many respects more pressing. The failure rate for firms with capital below $5 million is shockingly high. And why is that? Because too many people think running a forex broker dealer is as easy as running a bagel shop. But this next three part series on the demise of Forefront Investments (aka CFG) is evidence of how difficult it is to run a forex brokerage and why as a result of CFG’s collapse the NFA has an even stronger case to raise capital requirements.
I first became interested in the CFG case when an attorney posted this thread at Forex Factory: (CFG Trader/Snellgrove) asking former customers of CFG to contact him if they were still owed money. Still owed money? That piqued my curiosity. And so I began digging through the wreckage of CFG. Here is what I discovered: CFG got its license in November of 2003. But its owner, Don Snellgrove, founded the company in 1998. (Concorde Forex Group, Inc. : Henrico County, Virginia) Originally the firm was in the forex training business. Essentially, for a fee, CFG would assign traders a mentor whose job it would be to teach “the forex” to rookie traders. While some customers complained about the ineffectiveness of the training (Rip Off Report: CFG - Concorde - Concorde Forex Group - Concorde Financial Group - Don Snellgrove Absolute GARBAGE Total failure of me and many others Richmond Virginia) there are no indications that CFG was involved in any fraudulent activities. Indeed, Snellgrove had a reputation for being a very religious man and is quoted on his own website as saying, “We sincerely want people to succeed! Galatians 5:1 in the Bible, states that one should not be under bondage. 99% of the people who talk with me are under the bondage of debt. The Forex market is the largest legal cash flow industry in the world and a potential vehicle to achieve success by just about anyone and thus move out of bondage.” (CFGNews - Page: 8 of 11) Unfortunately, Snellgrove’s decision to turn his training business into a full fledged forex broker dealer would not only leave his customers still under the bondage of debt, but transform them into the Gimp from Pulp Fiction after the firm went under and their accounts were frozen. But before going there it is important to review Snellgrove’s career to date. He was a good and moral man, he had a clean regulatory record, his company was fairly transparent as he had an open door policy with all his customers at his rather large office in Virginia, and he had been in the business since the late nineties. But there was one missing ingredient in this forex broker dealer cake: Snellgrove was poorly capitalized. And that’s why the firm went under. More to come… Tomorrow- Part II “The Collapse of CFG”
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08-07-2007, 12:44 PM
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The Collapse of CFG
In January of 2007 CFTC reports showed that CFG Trader had $1,790,000 in Adjusted Net Capital. That means they were $800,000 over their required amount. So for the average trader checking in on CFG everything looked good right? Suppose you also checked the NFA website and saw they had a clean regulatory record. Looks good right? You spoke with a smooth talking sales rep and saw they had been in business since the nineties. Looks good right? Boy would you have been wrong. For it was at this time that CFG began to unravel.
According to the NFA in its 2007 audit NFA noted that, “the balances on Forefront’s Form 1-FR dated January 31, 2007, which had been previously filed with NFA, were inconsistent with the general ledger the firm provided to NFA as part of the audit.” Furthermore, “Forefront had failed to include all customer liabilities when preparing its financial statements. As a result, it appears that Forefront was under the required minimum ANC by at least $850,000.” The next blow came on March 15th BASIC Case Summary …still not having received the updated financial statements, NFA spoke with Snellgrove, Conn, Lani and representatives of the firm’s accounting firm. NFA asked whether Forefront currently had the required minimum ANC. Snellgrove referred the question to Lani who responded that the firm did “not have accurate numbers to work with.” Additionally, Lani indicated that it would be “a fair statement to say that the firm does not know its financial status.” With CFG’s financials in chaos the NFA notified the CFTC who then went to court to get an injunction to halt the transfer of any money out of the firm. The CFTC injunctive action states the following: http://www.cftc.gov/opa/enf07/opa5310-07.htm According to the CFTC complaint, as of January 31, 2007, and perhaps earlier, Forefront’s net capitalization was below the adjusted net capital required by the Act and a Commission regulation. As of March 19, 2007, the complaint charges, Forefront’s adjusted net capitalization remained below the required adjusted net capital with Forefront’s total liabilities equaling $8,000,000 while its assets were only $6,760,000. Furthermore, the complaint charges Forefront with failing to maintain books and records that it is required to maintain pursuant to a Commission regulation. While the CFTC was dragging CFG through the courts the NFA decided to give CFG one final kick in the ribs while they lay curled up in the fetal position by hitting them with a formal complaint regarding their marketing practices on April 4, 2007: BASIC Case Summary At this point the court approved a receiver to preside over the dissolution of CFG and arrange for a customer buyout. I Trade FX put in the highest bid and then proceeded to take over CFG’s customer accounts. http://www.cftc.gov/opa/enf07/opa5311-07.htm The swift and stunning collapse of CFG ended happily enough with customers getting their money back. But it could have been much worse. What would have happened if a creditor had interceded to lay claim to customer funds as happened with the customers of RefcoFX? In such a drawn out situation a potential buyer would have been scared off and by the time the estate was settled (minus the huge legal fees of course) customers would have been lucky to get back a fraction of their investment. This is just one of the lessons to be learned from the Collapse of CFG. I will review the others tomorrow in “Part III – Lessons from the Collapse of CFG.”
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09-17-2007, 05:52 PM
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Forex Dealer Dead Pool (Version 4.0)
The CFTC has just released the latest Adjusted Net Capital Numbers.
http://www.cftc.gov/marketreports/fi...fcms/index.htm Now that the NFA has officially raised the minimum capital requirement to $5 million (http://www.nfa.futures.org/news/news...ticleID=194 2) these numbers are more important than ever so pay close attention everyone. Poorly Capitalized Firms Advanced Markets ($1,042,000) American National Trading Corp (Merged with PFG) Bacera Corporation (Shutdown!) Cal Financial Corporation (Shutdown!) Direct Forex ($1,117,000) Easy Forex ($4,731,000) E FX Options ($3,342,000) Forex Club ($3,715,000) FiniFX (Not Accepting New Customers) Forward Forex (Shutdown!) FX Option1 Inc (Shutdown!) GFS Futures & Forex ($3,259,000) Hamilton Williams ($1,004,000) MB Trading ($2,393,000) Nations Investments (Shutdown!) One World Capital ($1,078,000) Performance Capital International (Vanished) Royal Forex Trading (Merged with IKON) SNC Investments ($1,130,000) Solid Gold Financial ($1,955,000) Spencer Financial (Shutdown!) Trend Commodities (Shutdown!) United Global Markets (Shutdown!) Worldwide Clearing (Shutdown!) Wall Street Derivatives ($1,220,000) Unregulated Firms (Buyer Beware) FXDD (?) GCI (?) WestCapFX (?) ACM (?) MIG (?) DukasCopy (?) GFX Group (Forex.CH) (?) Crown Forex (?) Krusty's Currency Trading (?) Tradex Swiss AG (Shutdown!) NorthFinance (?) We have just about reached the time for choosing. The brokers in the Dead Pool have known about the NFA’s plans to increase capital requirements for some time now. And yet most have not made much of an effort to increase their reported adjusted net capital (with the exception of Money Garden who just raised the reported capital to $5 million. As a result they have been removed from the pool.) That’s a major red flag in my book. As such I will continue my dispatches on the Dead Pool and warn traders to avoid these firms until they show they can meet the new capital requirement passed by the NFA and awaiting approval by the CFTC. One final note, I have included Swiss brokers in the “Unregulated Firms Buyer Beware” list. I have two words for anyone considering opening an account with an unregulated Swiss broker “Tradex Swiss.” Don’t make the same mistake the poor traders at Tradex Swiss AG made and trade with an unlicensed broker that is unaccountable to anyone because should the firm get into trouble NO ONE is going to help you get your money back.
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05-05-2008, 07:21 PM
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Shark Hunting in the Caribbean
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!) http://www.cftc.gov/files/enf/02orders/enfgci-order.pdf 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 Quote:
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 Quote:
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.
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05-06-2008, 01:34 PM
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eToro: All Hat, No Cattle
This is going to be a post rife with Texas sized clichés. How can it not be with a company with a name like “eToro” that has a logo with a pair of bull horns jutting out of it?
First of all who are these guys? Well they are one the newest FX brokers in the market who are taking a very novel approach to currency trading. They also have ties to the online gambling rackets as their CTO is David Ring who was a key R&D leader at Israeli-based 888.com (a major online casino and poker operator) according to this feature article that came out last fall: eToro Makes Forex Trade Child’s Play But this Israeli firm’s ties go much deeper than to just an Internet gambling website (and please spare me the term “gaming.”) They also have connections to none other than Shimon Peres, the President of Israel. It appears Shimon Peres’ son, Chimi Peres, is one of eToro’s private investors: Pitango Venture Capital - Nechemia (Chemi) J. Peres So how is eToro standing out in the marketplace aside from their exotic resume? Well they have created the first forex video game. You have to see the screen shots to believe them: http://www.techcrunch.com/wp-content/etoro_match.jpg http://www.techcrunch.com/wp-content/etoro_marathon.jpg But aside from the cute cartoon characters inhabiting its software (which led one trader to state eToro should rename itself “eTarded”) the truth is eToro is just shoveling the same old Bull at traders. What makes me say that? Well, when I asked them if they were regulated they gave me the ol’ Texas Two Step. Check out this chat transcript below: Quote:
When I point out that eToro is not listed as having a license at the Cyprus SEC website I’m directed to another company that supposedly has a license, retailfx.com, I find they don’t have a license either. At which point the customer service rep breaks down and blabbers about their arrangement with IFX. Clearly eToro talks the regulatory talk but they don’t walk the regulatory walk. So what about this link with IFX? Well it turns out that eToro can’t accept U.S. customers. Hmmm. That’s strange. Plenty of offshore forex brokers accept U.S. customers. Why not eToro? Instead, eToro has to rely on IFX who is apparently white labeling eToro’s Sony Playstation, er, forex trading software. It’s pretty obvious why eToro can’t accept U.S. customers. It’s because they are nothing more than a gambling shop and online casinos outside the U.S. are not allowed to accept U.S. customers. eToro’s lawyers are obviously worried that Uncle Sam will come after them with a vengeance if they start soliciting customers (not to mention the MGM Grand, Powerball, Pat Robertson, Ralph Reed and Mike Huckabee.) What does that tell you about the kind of dealing desk these guys are running? The firm is a straight up casino- they only make money if you lose money. It is market making on anabolic horse steroids. In short, it is every currency trader’s worst nightmare come true. By the way I sent eToro an email asking for clarification on their regulation. Of course there was no reply. Lord somebody fence these guys in…
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05-22-2008, 01:32 PM
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Forex Bastard's Babe Bound for Big House
So many scandals, so little time. Late last year Felix Homogratus the infamous “Forex Bastard” of forexpeacearmy.com fame got swept up in an international sting operation conducted by the Department of Homeland Security. (See Complaint Document: http://www.pipwizard.com/pdf/marriag...-complaint.pdf )
Apparently forex bastard was dating and harboring a Russian vixen (photo here: Pair arrested in green card marriage that resulted from Web ads - Los Angeles Times) who had participated in marital fraud. This Monday Yuliya Mikhailovna Kalinina started serving a four month “home detention” sentence and will likely face deportation according to the San Jose Mercury News: http://www.mercurynews.com/news/ci_9113354 Quote:
'Green Card Marriage' ad nets arrest - CNN.com Sure enough there was some down on his luck bloke out there foolish enough to take her up on her offer. That Wally Brain would be Benjamin Adams. Kalinina's live-in boyfriend, Dmitri Chavkerov, an Internet-ordained minister, wed the two defendants. Who is Dmitri Chavkerov? According to EuroMoney Dmitri Chavkerov is none other than Forex Bastard: http://www.euromoneyfix.com/Article....icleID=1853868 Dmitri you magnificent bastard! Not only are you a forex bastard, but you’re an ordained minister too?! What a true Renaissance man… Nice of you to also take Yuliya off Benjamin Adams’ hands and put her up in your swinging pad, where I assume she is now serving her four month “home detention” prison sentence? Now that’s an easy piece of prison time with built in conjugal visitation rights included! So is this the end of the notorious forexpeacearmy? According to a thread at Elite Trader titled “Felix Sells Out” MB Trading has cut its ties to Forex Bastard and torn up their IB agreement with him: Forums - Felix Sells Out But Forex Bastard is nothing if not resilient. Over the years he has hosted a slew of forex related websites and changed his name more often than Prince: Forexbastard.com Forexpeacearmy.com Kingofforexsignal.com Forexfreedom.com But it will be hard for the Bastard to re-invent himself in light of this story. Google Forex Bastard and Dmitri Chavkerov and you’ll find a bucketful of blogs designed to bring down the Bastard, most notably: Attacking Forex Market which makes some hair raising allegations that imply that the Bastard is not just running his own little websites but also pulling the strings behind a whole host of actual forex dealers. Such is the nefarious influence of Forex Bastard that he has spawned a whole series of paranoid blogs that insist he is some kind of one man Freemason Society (or Stonecutter Society if you prefer: http://www.youtube.com/watch?v=sdaRuTwWl9I). If that isn’t enough to warn you off from forexpeacearmy there is this very insightful video by a trader who demonstrates how the reviews at forexpeacearmy are bogus and not worth the pixels they are printed on: YouTube - Forex Scams - forexbastards.com It’s a mad, mad, mad forex world we live in. Thank heavens all these guys have to get licenses in the next few months. This insanity has got to stop.
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05-22-2008, 01:58 PM
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D'oh!!!
D’OH!!!
WASHINGTON (CNN) -- Lawmakers scrambled Thursday to fix a clerical error that derailed an effort to override President Bush's veto of a $300 billion farm bill. Congress may have to revote on a $300 billion farm bill due to what Democrats called a clerical error. The House of Representatives voted 316-108 Wednesday to override the president's veto, but shortly after the vote, lawmakers learned that a "not particularly controversial" section of the bill was accidentally omitted from the version that Congress sent to the White House, said House Majority Leader Steny Hoyer, D-Maryland. The discovery prompted concerns from Hoyer's Republican counterpart that the override vote was improper. "What's happened here raises serious constitutional questions -- very serious," said Minority Leader John Boehner, R-Ohio. "I don't see how we can proceed with the override as it occurred." Hoyer suggested that the section left out of the original bill -- authorizing trade and food aid -- could be approved by both houses of Congress and sent back to Bush, "either to be signed by him or vetoed by him, and we would consider it in that context." But late Wednesday, a Democratic leadership aide said the House likely will hold an entirely new vote on the complete farm bill, move it to the Senate for a quick vote and send it to the White House -- where Bush is likely to let it die without his signature during the Memorial Day recess. Democrats said the matter stemmed from a clerical error. But Republicans pounced on what they called a "fiasco," which they said would require a temporary extension of the current farm bill.
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