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

[o990l6mh]

The importance of this can't be overstated. Yet I think very many traders, newbies in particular, will be completely surprised by their brokers closing up shop.

Maybe something to include in the babypips school, or perhaps put a sticky post on the newbie section.

To me, it seems that a lot of newbies are just looking at the shiny parts when choosing a broker and not at the important things, like ability to comply with financial requirements coming soon.

Much praise to you, forex savior, for your generous efforts in increasing awareness!

[Querelle1]

I've heard alpari us has closed for lack of liquidity, does anyboy know something about that? That really worries me, since some of them have just suddenly closed. I had to call my broker to make sure they won't lol.

[forex savior]

Francesc at FX Street is reporting that the SFBC investigation of Crown Forex continues and that customers still can’t withdraw their funds. However, it appears the blockade may be lifted in a few weeks time.

Francesc’s Weblog » Update - Crown Forex investigation… still weeks to go

As I know many of you are highly concerned for the sake of your money at Crown Forex as the firm is currently under SFBC (Swiss Federal Banking Commission) investigation, I’m trying to be in close contact with management at Crown Forex and SFBC in order to keep you as best updated as possible.

Today, I got a phone call from SFBC. My counterpart was not able to confirm me when the investigation will end but from our conversation I got the feeling that we are not far from it.

I had been previously told that we could see the end during this week but it seems that the investigation will still last for some more weeks.

What I do get a confirmation is that it is totally true that SFBC does not allow traders to withdraw their money till the investigation will finish. To get this confirmation from SFBC is definitely a relief for me and I hope it is for many of you.

This is what can happen to you if you trade with an unregulated broker. Beware Swiss brokers that do not have a banking license.

[mp6140]

this one caught my eye simply because of "swiss" and "crown", but should include "interbankfx" also.

NEVER in my use of brokers have i run into two more unsavory companies --- crown used to consider you a "scalper" if you made two trades for six pips or less within a day or two day period, and then stop you from trading, while Interbank NEVER hits the correct price with their price --- NOT even close !

it once got me so angry that i pulled a rant on all the sites i could find, as this was NO demo, but someone elses real account who was in trouble, and hard as it is to straighten out a bad account, crown and interbank made it doubly hard !

hope everyone gets their money and they the brokers get hung by their you know whats cause chocolate and cukoo clocks aint what the swiss are famous for --- they are famous for being the biggest banking cheats in the world, and im SO glad there are new offshore banking that may just put the country out of business.

Switzerland is famous for its nuetrality, which translates into "we lend money to ANY ONE --- dictator or not --- all we care about is the money !

sorrry, but i truly hate these worms !

mp

Originally Posted by forex savior

Francesc at FX Street is reporting that the SFBC investigation of Crown Forex continues and that customers still can’t withdraw their funds. However, it appears the blockade may be lifted in a few weeks time.

This is what can happen to you if you trade with an unregulated broker. Beware Swiss brokers that do not have a banking license.

[o990l6mh]

About Interbank, I might also add that it's kind of annoying that they open their markets when they do. This creates a sunday candle that represents just a couple of hours and basically it will just screw with indicators.

This was enough for me to choose not to go with Interbank. It's surprisingly hard to find a good broker among the regulated ones. Hopefully swiss banking licenses, tougher NFA and CFTC regulation etc will move things in the right direction. But that will surely come at a cost, such as decreased competition in the business.

[White_Tiger]

Originally Posted by o990l6mh

The importance of this can't be overstated. Yet I think very many traders, newbies in particular, will be completely surprised by their brokers closing up shop.

Maybe something to include in the babypips school, or perhaps put a sticky post on the newbie section.

To me, it seems that a lot of newbies are just looking at the shiny parts when choosing a broker and not at the important things, like ability to comply with financial requirements coming soon.

Much praise to you, forex savior, for your generous efforts in increasing awareness!

Thanks I'm looking for broker for live soon but never see this thread. Very helpful if we can sticky this in newbie so they just like me know who to look for.

WT.

[forex savior]

Last year Rosenthal Collins bought MG Forex just as the first capital requirement was set to kick in. RCG then announced that MG Forex was a subsidiary of Rosenthal Collins Securities, which is regulated by FINRA, not the NFA. Thus MG Forex was able to avoid the $20 million capital requirement since FINRA members need only $250,000 in capital.

That was then.

Last week FINRA released a proposal capping the margin level that forex brokers can offer at 1.5 to 1. Essentially, FINRA is saying you can’t trade forex on margin.

FINRA - Regulatory Notice 09-06

The rule will not effect NFA registered forex brokers. But for those forex brokers with FINRA licenses the party appears to be over. Why is FINRA doing this?

FINRA has observed a potential migration of retail forex activity from the FCM channel to Broker Dealers…

Hmmm, couldn’t be that forex dealers who didn’t have the capital to keep their NFA licenses were suddenly showing up to get a broker dealer license on the cheap? Well, if that was the case consider that escape hatch to be boarded up.

What will MG Forex do now?

[forex savior]

Yet another small forex dealer is getting out of the U.S. market. HotSpot FXr is closing down their retail fx business and selling their customers to FXCM. This would be the third forex dealer that FXCM has feasted on this month.

FXCM Acquires Certain Assets of Hotspot FXr’s Retail Forex Business

The consolidation of the retail fx industry in the U.S. has dramatically accelerated in the last few weeks with ACM, ODL and now HotSpot departing.

HotSpot’s case is particularly interesting. They are owned by Knight Capital which certainly has plenty of cash to meet the $20 million requirement. But apparently their retail business isn’t large enough to justify their continuing operation.

Again, this is why a firm’s net capital number is so important. Many thought that because HotSpot was owned by Knight they didn’t need to report a lot of capital. But it turns out that Knight was not willing to fork over the money needed to keep Hotspot FXr a going concern. At the end of the day, HotSpot’s net capital number was a spot on indicator of the firm’s viability. Taking nothing else into consideration, their number gave off the impression of a firm struggling to stay afloat. So in the end is it really a surprise that their retail business sank to the bottom of the ocean?

Once again, traders should be aware of the risks you take by trading with a forex broker with net capital below $20 million. As we are seeing smaller forex brokers are liable to close up shop giving their customers very little notice. Here today, gone tomorrow.

Or in HotSpot’s case, gone in two weeks time…

[forex savior]

As we await the next CFTC Net Capital Report I thought I’d post some of the best trader thread titles I’ve seen on the Net’. Many an angry trader loves to lash out at their broker or adviser and there are some pretty humorous, if not over the top, thread titles detailing the woes and eccentricities of the retail fx trading public. Here are some of my favorites:

1. “GFT Forex – Nazi Paradise”
Forums - GFT Forex - Nazi Paradise.

Apparently, the creator of this thread, “IShopAtPublix” has never heard of “Godwin’s Law,” which states that invoking Hitler or the Nazis in an analogy serves to discredit the person who is injecting Der Fuhrer into the conversation. So why was this trader calling out GFT for being jackbooted storm troopers? Because they asked him for a photocopy of his credit card…

“Vee Hav Vays of Making you Talk!”


2. “FX Open Scam Scum”
FXOPEN SCAM SCUM - Page 9

Months ago I wrote about a broker war between FX Open and Poltek FX. Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool

Sadly, a tentative cease fire has appeared thus robbing the trading public of one of the most entertaining flame wars on the Internet.

Hot on the heels of this truce comes another “Peace in our Time” declaration as thread creator “Maxey” announces that he has gotten his long awaited payout of $70,000 from FX Open thus bringing a close to the volatile “Scam Scum” thread at Forex Factory.


3. “Felix with a Criminal Record (Forex Peace Army Under Government Investigation)”
T2W Day Trading & Forex Forums

The last year and a half has seen Felix Homogratus’ Peace Army under heavy scrutiny on various fly by night blogs and all over the bulletin boards. This is but one of the innumerable threads where the Peace Army does battle against its critics. In this one “Tom Harris” can be found ranting about the Peace Army being under government investigation. Mind you, no proof of such an investigation is ever presented but we are reminded that Forex Bastard’s girlfriend was thrown in the clink a year ago.

If you like the “paranoid style” this thread is for you.


4. “Patrict Sim’s (ExpertForextrader) Failed Arbitrage Strategy – Professional Scammer”
Patrick Sim's (ExpertForextrader) Failed Arbitrage Strategy - Professional SCAMMER

TalkGold is one of my favorite forums and has more threads than you can shake a stick at. Granted, many of the threads are from shameless marketers selling every forex related product under the sun, but that’s what makes the forum so interesting. It is a total free for all and gives traders a wonderful bird’s eye view of the utter chaos that is the retail forex market.

In this thread a trader by the name of “patricksimbastard” excoriates the real Patrick Sim whose trading signals “patricksimbastard” doesn’t seem to care for:

Please be informed that “expertforextrader” is a scammer. He is based in singapore and he has been soliciting funds from investors with his failed bogus strategy. I'm a one of his victims. Here are his deeds and all the amounts discussed were in SGD. All these were under the pretense of using his so called arbitrage forex strategy which serve to fail.

"Expertforextrader" is no expert but a professional clown. He is a 58year old (as of 2009) BANKRUPT man who went bankrupt because mere credit card banks initiated by the bank of amt $20,000. He used to be a former Singapore Airlines Co-Pilot and was sacked as a result of his neglience in flight as just like his attitudes towards his boo hoo forex stategies.

I like the “professional clown” appellate. So does patricksimbastard have a case? Don’t know, but whenever I see someone claiming to have a “Holy Grail” forex trading system as Patrick Sim claims to have I make it my business to stay as far away from such “experts” as I can. Patricksimbastard should have done the same.

5. “Oanda- Add Your Scam Screens Here”
Forums - Oanda - Add Your SCAM SCREENS Here

81 pages and still going strong. What has Oanda done to deserve such disrespect? Well, nothing. At least nothing out of the ordinary. Bad fills are a dime a dozen in retail forex, especially if the broker you trade with is a market maker taking the other side of the trade. Yet that doesn’t stop traders like “forestgril” from declaring jihad after they get a bad fill and taking to the bulletin boards to declare a fatwa on their broker. Another poster on this thread sums up “Forestgril’s” situation perfectly:

Forums - Oanda - Add Your SCAM SCREENS Here

Why are you still using Oanda if they are costing you money? You have been pissing and moaning about them since the beginning of March with their executions and phantom prices, etc.

Why do you still use them? Why have you not found a "better" broker for your trading style rather than stay with the same group that causes you such fits? If you come back here next month at NFP with the same complaints than you have no one to blame but yourself. It only takes a week (at most) to set up an account somewhere else.

Ah but nothing beats blaming your lousy trading on those rascally brokers does it? In any case Forestgril will not be denied:

I will switch to another broker, but first I will beat them and get my lost money back. It is unreasonable, but I want them to see, that all in all - my account was not profitable to them. For my satisfaction - I will get from them twice the sum, that I have lost, and then - get out.

Well, the best of luck to you Forestgril. You have your work cut out for you- as do all the disgruntled traders of fx world.

[forex savior]

Sources are telling Jamaican media outlets that David Smith’s infamous investment scheme has only $10 million in local cash on hand. In short, it has become clear that David Smith is the Bernie Madoff of Jamaica, with the exception that Smith’s Ponzi Scheme is doing far more damage to the local economy: Welcome to the Jamaica Herald Online

Although banker/client confidentiality prevents the Michael Lee Chin controlled National Commercial Bank of Jamaica (NCBJ) from disclosing details of its relationship with clients, highly placed sources say that the David Smith, led Olint Corporation only has US$3 million in its local accounts and about $7 million in those in the Turks and Caicos Islands.

Speculation has been rife as to how much money is in the company’s local accounts, since NCBJ got the go ahead from the Privy Council to close the renegade foreign exchange dealer’s accounts. Olint reportedly owes cash strapped investors some US$100 million. The company’s inability or unwillingness to pay investors since the end of the year 2007 has been having a negative impact on the construction and real estate, automobile as well as retail sectors.

Meanwhile, the NFA has yet to issue a ruling in regards to its complaint against I Trade FX: Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool

Smith was a formal principal at I Trade FX and while the NFA is not investigating Smith himself a ruling by the NFA could help clear up exactly what Smith has been doing with his customer’s funds all these years.

Hopefully, regulators have this case at the top of their “to do” list. It is far too important for them not to.