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

[forex savior]

The NFA has come out with a statement that reads as follows:
National Futures Association | News Center

Net Capital Requirements for Forex Dealer Members

On October 22, 2008, the Commodity Futures Trading Commission approved increases to NFA's capital requirements for Forex Dealer Members (FDMs). As stated in a July 23, 2008 Notice to Members, the minimum requirement will be $10 million as of October 31, 2008, $15 million as of January 17, 2009, and $20 million as of May 16, 2009.

The deadline to meet the new capital requirement is this Friday. The most up to date CFTC net capital statement shows the following firms with capital below the $10,000,000 requirement.

Financial Data for FCMs

MG Financial $5,393,000
Advanced Markets $6,786,000
Forex Club $7,558,000
Friedberg Mercantile $8,147,000
ACM $8,372,000
Ikon $9,544,000
Easy Forex $9,824,000
Hotspot $9,942,000

If you have an account with any of these firms contact them immediately to ensure that they will be able to comply with the new capital requirement this week. Some such as MG Financial and Hotspot have larger parent companies. But most do not. In this day and age safety of funds should be every trader’s top priority. Make sure your funds are safe.

[forex savior]

I hate to say I told you so, but, I told you so. Nations LLC has posted on their website that they are officially bankrupt and that “it does not appear likely that there will be sufficient funds to pay all claims of creditors and customers in full.” This is precisely what I have been warning about. When you trade with a poorly capitalized firm you are at much greater risk of losing your money because in the forex industry poorly capitalized firms have a terrible track record (this year alone over a dozen have gone out of business.) This is precisely why the NFA has raised capital requirements to $5 million. And as with One World Capital I put out a warning on Nations well before they started taking customer funds hostage.

Here is what I said on July 19, 2007:

“The order holds Labell and WWF (Worldwide Forex) jointly and severally liable to pay WWF's customers restitution in the following amounts: WWF $3.1 million and Labell $1.5 million. The order also imposes civil monetary penalties of $126,000 against Labell and $3.1 million against WWF. Finally, the order permanently prohibits defendants from engaging, directly or indirectly, in any commodity-related activity.”

http://www.cftc.gov/opa/enf07/opa5341-07.htm

End of story right? Not in the domestic retail forex industry where the shysters rise from the grave like the flesh eating zombies from 28 days later. Nope, what really makes this story juicy is the fact that refugees from Worldwide apparently migrated over to another firm, a dead forex firm walking, by the name of Nations Investments LLC. ($1,699,000 in net capital).

BASIC Details

In fact, Nations even has the same address as did Worldwide!

1700 NW 64TH ST. SUITE 100

FT. LAUDERDALE, FL 33309

Anyone want to make odds on how long it will be before Nations gets shuttered? Perhaps the folks over at Intrade can add a dead forex firms expiration date contract to their prediction market. If so, I’m going long on Nations going under. And I ain’t worried about a margin call…

Then on July 24, 2007 the NFA closed Nations:

So what happened at Nations? Why was the NFA forced to take an "emergency Action" and shut them down? Well, because it was basically one of the industry's worst nightmares come true. An undercapitalized firm suffered massive losses and was forced to cover them with customer funds. Here is what the emergency action states:

"On Saturday, July 21, 2007, Nations sent to NFA, via e-mail, notice that it had fallen under the minimum required adjusted net capital."

On Monday, July 23, 2007, NFA sent a letter to Nations notifying the firm that as it was unable to demonstrate compliance with the minimum requirements Nations was to cease doing business. That same day, NFA received another notice from Nations representing that the firm had fallen under the required minimum "due to losses in the forex markets." This letter also indicated that Nations was attempting to raise $5 million "to make customers whole." (YIKES! "make customers whole?!" Who on Earth is going to give Nations $5 million?! While nations has been successful at making a fool of their customers they certainly won't be making them whole.)

Nations also provided NFA with a Form 1-FR as of July 20, 2007, which indicates that Nations owes customers trading in on-exchange futures more than $3 million and customers trading Forex more than $5 million. (Wow. What an implosion. They are $8 million in the hole? What the hell were they doing over there going to Vegas and playing craps with customer funds?)

This looks like another messy court case. With financials like this I expect the creditors will be coming out of the woodwork laying claim to what's left of Nations. If they're lucky they might be able to seize a fax machine or two, but as for customer funds, well, looks like some stripper in Vegas got her hands on that money first...

On September 6, 2007 the CFTC then Dropped the Hammer on 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.

This week this statement appeared on Nations Website
Nations Investments

Notice to Customers and Creditors of Nations Investments, LLC

On July 24, 2007, the National Futures Association ('NFA') issued a Member Responsibility Action against Nations Investments, LLC ('Nations' or the 'Company'), which among other things, directed the Company to close all open positions of forex account customers by July 25, 2007 at 5:00 p.m. (EDT). At the same time, the NFA authorized the bulk transfer by the Company of all the accounts of its on-exchange customers to Open E Cry, LLC, another Futures Commission Merchant. Accordingly, this Notice (and the administration of the receivership) is primarily for the benefit of the former Nations forex customers. (Former Nations on-exchange commodities account customers may contact Emily Stephens concerning their account at Open E Cry, LLC, telephone: (800) 920-5808.)

On July 30, 2007, the Commodity Futures Trading Commission ('CFTC') filed a Complaint against Nations in the United States District Court for the Southern District of Florida (the 'Court'). On August 7, 2007, the Court entered an Order pursuant to which the Court appointed Bruce H. Matson as Receiver for the Company and its assets. A copy of the Order can be viewed on this website.

The Receiver currently is attempting to determine the extent of the customer account balances and the other liabilities of the Company. He has taken possession and control of the assets and records of the Company. The Receiver also is attempting to identify what additional assets may be available to make payment to customers and creditors. The goal of this process is to (i) identify accurately all of the unpaid account balances of the Company's customers as of July 25, 2007, (ii) identify all other creditor claims, (iii) identify and collect any and all assets of the Company (including the possibility of asset recovery actions against third parties), (iv) distribute monies recovered pro rata to customers and creditors; and (v) provide the Court with a final accounting of the Receiver's activities. The Receiver is making every effort to seek cost efficient avenues to recover assets for the receivership and complete the claims process. The claims process, however, requires the identification of customers (and other creditors) and a determination of the validity and amount of their claims. This process is likely to take a number of months. If appropriate the Receiver will consider making an interim distribution to customers and other creditors. Customers also should be advised that, at the present time, it does not appear likely that there will be sufficient funds to pay all claims of creditors and customers in full. The CFTC complaint states that there are in excess of $5 million of customer liabilities and less than $2 million of cash assets remaining. Although it is much too early to predict, the recovery for customers may well be less than fifty percent (50%) of account balances as of July 25, 2007.

The Court directed the Receiver to file a report sixty (60) days from entry of the Order, the first to be filed by October 8, 2007. At that time, the Receiver will provide access to that report on this website. Finally, customers and creditors should refer back to this website from time to time for any updates.

Specific inquiries should be directed to the Receiver, Bruce H. Matson at LeClair Ryan at (804) 343-4090 or to Katherine M. Mueller at (804) 916-7117.

Real people have lost real money, not because they took trading losses but because they invested their money in a firm that was poorly capitalized. Don’t make the same mistake they did. Don’t trade with a poorly capitalized firm.

[singaporefx]

hi guys ,

u missed out MFglobal which is a leading company in the fx markets

[forex savior]

The National Futures Association appears to be chucking a couple final spears into the bloated carcasses of two former dead pool brokers (Trend Commodities Limited Partnership and the Bacera Corporation.)

Trend Commodities has been permanently shut down and banned from NFA membership (BASIC Case Summary) while the Bacera Corporation was fined $50,000.

Of interest in the Bacera case was this statement, "The Committee found that Bacera failed to maintain required adjusted net capital, failed to give required notice of being below its minimum net capital requirement, and failed to take required capital charges and maintain accurate records." (National Futures Association | News Center)

Again, it's all about capitalization. Firms that have adequate capital don't run into these kinds of problems. Firms that are poorly capitalized continually run into these kinds of problems and often times go out of business, in some cases taking customers down to the bottom of the ocean with them. It's that simple.

[forex savior]

At last the customers of RefcoFX are getting their money back. Reports coming in over the wires indicate that customers are getting back roughly 40 cents on the dollar of their original investment. While that's still a very heavy loss to take at least the customers are getting something after two years of watching creditors loot their accounts. Phil Bennett and the rest of the board at Refco should know that there are some rather toasty seats in hell waiting for them upon their arrival.

The end of the RefcoFX nightmare brings with it a clear lesson to always trade with a regulated firm. If a firm isn't licensed, then stay away from it. Far, far away from it. And also be sure the firm you are trading with is well capitalized. The case of Nations, which was an undercapitalized broker on the dead pool is further evidence of that. And sadly enough, now Nations begins the journey that RefcoFX just ended.

[loveforex]

Being regulated is great, but NFA will do nothing should you have a problem with a broker. They are just a membership body doing business by charging registration fees.

Everything seems to be over regulated in USA and in favor of multi million giants as if to indicate that higher capital = safety.

America no longer offer equal opportunity. More money more equal. Notice how all small mom and pops stores disappeared and owners now all work for big co. that "closed" them down. The same will happen with fx brokers.Traders will have no choice but to deal with giants, and when competition narrows guess who is in trouble? Traders, of course.

Also, just because someone have a Swiss address and a Swiss phone number does not mean they are Swiss co. and located in Switzerland.

Most of them are not actually Swiss, but based right in here ..USA.

Good day.

[forex savior]

NFA is on the war path right now. This is the THIRD poorly capitalized firm they have closed this week. If you are a customer of Hamilton Williams or Velocity4x or whatever the hell they call themselves get your money out now. And for the Love of God stay away from poorly capitalized firms! They are dropping like ten pins.

BASIC Case Summary

COMPLAINT:
On May 18, 2007, NFA issued a Complaint charging Hamilton with use of deficient promotional material by non-Member solicitors. The Complaint also charged Hamilton with failing to maintain adequate books and records necessary and appropriate to conduct its business. Finally, the Complaint charged Hamilton with failing to take applicable concentration charges; failing to maintain adequate adjusted net capital; and failing to collect the required minimum security deposit.

ANSWER:
On July 5, 2007, Hamilton filed an Answer to the Complaint in which it denied the material allegations contained therein.

DECISION:
On December 5, 2007, Hamilton was ordered to pay a $90,000 fine. Hamilton was also ordered to cease to accept accounts or receive compensation, directly or indirectly, for forex transactions that are introduced by any person unless that person: (1) is an NFA Member, Associate of NFA, or pending approval as an NFA Member or Associate and is not subject to a Notice of Intent to Deny or Revoke registration; (2) is a member or associated with a member, of a national securities association registered under Section 15A(b) of the Securities Exchange Act of 1934 and is operating pursuant to such membership or association; or (3) would be exempt from CFTC registration if such person were acting in the same capacity in connection with exchange-traded futures products.

[forex savior]

It’s due diligence time once again. With the Farm Bill set to become law the trading public needs to start preparing for the changes just over the horizon. The following U.S. registered firms do not currently meet the first 120 day benchmark ($10 million) the Congress has recently set for Retail Forex Dealers according to the latest CFTC Net Capital Report:

http://www.cftc.gov/stellent/groups/...cmdata0308.pdf

Advanced Markets $5,100,000
Bacera $5,500,000
Money Garden $6,600,000
Easy Forex $7,200,000
MB Trading $7,700,000
Hotspot $7,700,000
Forex Club $7,900,000
Friedberg Mercantile $8,000,000
CMC $8,300,000
Alpari $8,800,000
Ikon $8,800,000

Now obviously some of these firms can come up with the money as several have large parent companies who are loaded (CMC and Hotspot for example.) But just as past dead pool members were unable to meet the former $5,000,000 mark so too is it likely that some Autumn Equinox Pool members will be unable to meet the upcoming $10,000,000 mark which is set to go into effect at the end of September should the legislation become law before Memorial Day as expected. Which firms may fold as a result? No one can say for sure. But I certainly would not want to be a trader at Bacera, Advanced Markets or Money Garden right now.

Since the worst of the forex dregs were purged in the last dead pool the likelihood of any of these firms going belly up like One World Capital is slim. That’s the good news. The bad news is firms that know they are going out of business have a strong incentive to really screw over their customers and give them the worst execution possible as they try to grab some traveling money before they have to hit the road. This is why I’m recommending that traders avoid opening new accounts or depositing any additional funds with Advanced Markets, Bacera and MG Financial until they clearly demonstrate they can meet the new capital requirement.

I suspect the remaining firms will have enough capital to meet the $10 million requirement but traders who have accounts with these firms should be sure to speak with them and discuss the firm’s long term strategy for dealing with the full $20 million requirement. There is going to be a lot of mergers in the industry in the next twelve months and traders are likely to suffer in the chaos as customer service gets chopped up and dealing desks start really squeezing traders in their last dying days. Know in advance what you are in for and be sure to do your due diligence now more than ever.

[forex savior]

“I am now indemnifying all the directors and employees as I am the only one that was aware of these activities and I am now at this stage unable to pay out and am making this proposal to you.” – David Smith, per Nationwide News.

It sure is beginning to look like Olint was a Ponzi scheme. A news report is stating that David Smith admitted the following in a leaked email obtained by Nationwide News: olint broke provider investforlife

1. The club is broke and most likely bankrupt
2. The older investors got their money out while the newer investors are the ones “carrying the losses.” Is that not the very definition of a Ponzi scheme?
3. He overstated his rates of return to club members.
4. The collapse of the fund was due to; competition from competitors, regulatory scrutiny, shoddy bookkeeping.
5. In particular Smith is blaming the Jamaican Government for raiding his company in 2006 as that loss of his records apparently precipitated an accounting fiasco resulting in “double payments” to some members. He then states that he didn’t report these “double payments” to his customers because he was afraid of a bank run which he once again blamed the Jamaican Government for starting.
6. Smith was only trading 50% of the funds while accounting for 100%.
7. He closes stating that Olint was “not a Ponzi scheme” and to give him another year to make it all back.

But no sooner had this report been read over the airwaves than David Smith himself called in screaming that he never wrote the email and that it was bogus. Smith said, “I had not written the email. It’s absolutely not true. And if you really think about it do you think my house is that big that I had to email my own wife?”

So who is to be believed? Well, with David Smith’s credibility in tatters my gut tells me the email is legit. But who knows for certain. What is certain is that Olint is El Busto.

Still, no word of any arrests in the Turks and Caicos. The investigation goes on and there will certainly be more to come.

[forex savior]

With the world financial system in chaos it’s never been more important to trade with a well capitalized firm. The CFTC has just released their latest net capital figures. Not a lot of changes from the last one. Only difference is that U.S. forex dealers have 30 fewer days to make it to the coming $20 million capital requirement deadline.

Financial Data for FCMs

The following firms have net capital below $10 million

MG Financial $5,393,000
Advanced Markets $6,786,000
Forex Club $7,558,000
Friedberg Mercantile $8,147,000
ACM $8,372,000
Ikon $9,544,000
Easy Forex $9,824,000
Hotspot $9,942,000

Not much change in capital for Advanced Markets, Forex Club and ACM. Swiss broker ACM still appears to be charging the proverbial machine gun nest with a butter knife. Is this firm really going to be able to put up $20 million in the coming months? Did they even know about this capital increase before they parachuted into the U.S. market? We’ll find out soon enough.

The following firms have net capital below $20 million

GFS Forex $11,451,000
MB Trading $12,767,000
ODL $14,870,000
I Trade FX $14,952,000
Alpari $15,786,000
IFX $18,623,000
FX Solutions $19,574,000

The following firms have net capital above $20 million

CMS Forex $20,199,000
PFG $21,345,000
Interbank FX $36,505,000
Gain Capital $67,906,000
GFT Forex $73,219,000
FXCM $91,840,000
Oanda $165,458,000

As always conduct your due diligence and make sure the firm you are trading with will be able to comply with the new law going into effect in the weeks and months ahead.