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04-20-2008, 01:21 PM
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Is there really an enforceable regulation for the fx trade now?
Hi everyone and especially to you forex savior,
I was in the process of going to ask help in choosing a broker, then thought to read through the thread to see if my question hadn't been asked and answered prior to this time. alas, i 've had a eye full(?), just finished going through the entire thread. Firstly, thank you to forex savior whatever anyone might think about your motive, i think it compels the prospective trader at least to become more aware by doing his own research. Now, this is my understanding about the issue of regulation of FDMs as it yet stands today, please, correct me if you believe i am wrong. NFA is at best a Self-Regulatory Organisation (more probably a designated self-regulatory organisation) for FCMs in the United States. CFTC functions are defined in their site as highlighted below: About the CFTC An Important Mission in the Ever-Changing World of Finance. Congress created the Commodity Futures Trading Commission (CFTC) in 1974 as an independent agency with the mandate to regulate commodity futures and option markets in the United States. The agency's mandate has been renewed and expanded several times since then, most recently by the Commodity Futures Modernization Act of 2000. In 1974 the majority of futures trading took place in the agricultural sector. The CFTC's history demonstrates, among other things, how the futures industry has become increasingly varied over time and today encompasses a vast array of highly complex financial futures contracts. Today, the CFTC assures the economic utility of the futures markets by encouraging their competitiveness and efficiency, protecting market participants against fraud, manipulation, and abusive trading practices, and by ensuring the financial integrity of the clearing process. Through effective oversight, the CFTC enables the futures markets to serve the important function of providing a means for price discovery and offsetting price risk. The CFTC's mission is to protect market users and the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures and options, and to foster open, competitive, and financially sound futures and option markets. In their site, FCMs are the closest type of businesses entities the CFTC has oversight functions for, FDMs does not seem to be included! Could this be because the fx trade is relatively in it's infancy? In performing their oversight function, CFTC indicates on their site for example that they require FCMs & IBs to be members of NFA. I couldn't find any mention of FDMs. Question: If CFTC's remit include legally the regulation of FDMs, why would they foot-drag in ensuring complaince with registration/regulation by the designated bodies as NFA in this instance? Is it not more appropriate to ensure the proper operation of such firms to prevent the tales of woe as experienced by failed FDMs? Forex Savior, refer to your thread #122 dated 17/9/2007 titiled FOREX DEALER DEAD POOL (version 4.0) where you indicated the following: 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 (?) Ignore for the moment the SWISS FIRMS in the above, why/how could they operate at all without appropraiate registration/regulation if they ought to according to the law as it stands presently? I read the quote from an ealier thread of FXDD which i have also copied and pasted (highlighted below) from the FAQ section on their site. Q: How is FXDD regulated? A: FXDD began as a subsidiary of Tradition North America within the Tradition Group of companies. (www.tradtiongroup.com). FXDD’s management, operation, compliance, customer relations and its financial policies and procedures were structured to meet the Tradition Group’s oversight and those policies and procedures remain firmly in place. Our managers have deep experience in the foreign exchange markets and we conduct our business as highly qualified professionals. As yet, the OTC spot forex market in the United States is not subject to regulation by the SEC or the CFTC. FXDD is not a member of any private self regulatory organization such as the FINRA or the NFA and is not registered with either the CFTC or the SEC. Congress may, in the future, enact legislation requiring registration with a federal and/or private regulatory agency. As the regulatory environment for spot foreign exchange matures in the United States, FXDD will keep its options open and, if the regulatory environment becomes consistent and well defined, FXDD will register with the designated oversight agencies. Having said that, FXDD manages its business in conformity with well established dealing protocols and the customs and practices of the foreign exchange dealing community. FXDD has thousands of clients who have chosen us as their dealing firm because of the manner in which we conduct our business and because of our historic association with the Tradition Group. We maintain extensive dealing lines with the top global banks and have never had any issues relating to the protection of customer assets or the manner in which we handle our client accounts. Note the underlined in the above(emphasis mine). I like to state that I am NO advocate for non-regulation. Far from it, I believe firmly in regulation of entities otherwise societies would be reduced to jungle style existence. I just think it should be well defined/structured but do not think that the issue of registration/regulation of FDMs is so right now in the United States. I believe too, that this will change because the retail fx trade is set to grow, the awareness is only just begun. As I indicated at the begining, my views are not set in concrete, I stand to continue to be educated. Lastly, I want to say thank you to the providers of this forum, what I have learnt here in less than one year is more than what some get out of a college degree programme and to all the contributors, more grease to your elbow;  eh, more pips to your accounts.
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04-21-2008, 01:52 PM
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04-21-2008, 01:53 PM
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Dirty Rotten Scoundrel
As I have illustrated on this thread there is no shortage of colorful con artists in the forex business. Yet there is one criminal mastermind in particular who always seems to skate away from his on ice thuggery with more dexterity than one of the Hanson Brothers. His name is Robert Gray. And when he wields the high stick more than just a few teeth go flying into the blood splattered night...
So who is this guy? How has he been able to cut such a swath through the forex industry for all these years? And how was he able to con, not just ordinary traders, but top U.S. Regulatory Agencies themselves? Well, he was able to do it using that old American adage that "Practice makes Perfect." The Rob Gray story starts back in the go go 80's on that notorious stretch of highway running from Boca Raton to Miami known to the Feds as "Maggot Mile." It was December 11, 1986, when our goodfella to be got started in the futures industry by applying to be an associate member of the NFA with the firm Multivest Options Inc and International Precious Metals Corp Inc in Fort Lauderdale. BASIC Details But Gray's career with these two firms would be short lived and by the summer of 1987 he was no longer licensed by the NFA and had apparently left these brokerages. Multivest itself would eventually be closed down for gross fraud within a few years. Let's role the tape and see how Gray got his start as a forex huckster: Multivest Options Inc was one of the many futures industry orifices oozing with criminality during the decade of greed. The firm all by itself had over 120 Reparations Cases with the CFTC. BASIC Details In 1988 the NFA settled a case with Multivest in which numerous salesmen were cited for fraud and high pressure sales tactics. BASIC Case Summary And then in 1990 the CFTC shut them down for good stating: BASIC Case Summary Quote:
The trail goes cold in the 1990's although rumor has it he gravitated over to the stock market (I can't imagine Gray missed out on the greatest con off them all, the Internet Stock Bubble...) But his grand debut in the forex world appears to be in 2000 at FXCM of all places. According to a hilarious story I picked up at the New York Traders Expo a couple months ago Gray was the head of sales at FXCM and in a feat of treachery worthy of an Italian Opera he bolted the company with all FXCM's clients on a floppy disk and went to work at FX Solutions! Well done Rob, Lord Vader from MultiVest trained you well... But it appears FX Solutions was not all the grateful as he lasted all of three months in their employ according to the NFA's Registration Records. BASIC Details Where to next for this Son of the Sith? Well, how about Director of Global Forex Operations for GFS Forex & Futures. Good Lord, how on earth did Robert Gray land this gig? Doesn't ANYONE do background checks anymore? Apparently not. Check out this article from 2003 which discusses the growing popularity of mini trading in FX: The road to mini-success. (Online Trading). | Software Services & Applications (301) from AllBusiness.com Quote:
http://www.dora.state.co.us/securiti...int%20rpt.pdf. Another interesting note from this lawsuit is the admission that GFS cleared all its trades through Interbank FX. Which brings us to Part II of Dirty Rotten Scoundrel, stay tuned...
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04-21-2008, 04:36 PM
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forex trade regulation
Thanks for your reply Forex Savior.
That CFTC lost that case goes to show somehow the indefinitiveness of forex trade regulation presently. I am willing to go long on a security (2 standard lots) that the whole arena of forex trade regulation will become more definitive in a little while. I think of the beauty of this kind of forum, one is the awareness that it provides, at least in the interim, people become more careful. The Robert Gray issue should make an interesting topic for students of psychology with particular emphasis on trait theory  seriously, imagine what it would be like if there were never any form of checks/regulation in the system, innocent people would be eaten alive. keep up the good work.
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04-21-2008, 06:47 PM
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04-23-2008, 01:05 PM
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Dirty Rotten Scoundrel- Part II
When last we left off Robert Gray was busy handing over the financial records of a shady managed funds firm operating under his nose at GFS to government prosecutors. As the court document described GFS was clearing its trades through Interbank FX.
The marriage between Gray and IBFX then became fully consummated in 2005. In March of that year according to the NFA Gray applied to be a Principal with Interbank FX. No telling if he ran over to IBFX with all GFS' clients but in any case he appears to have officially stayed at IBFX for about six months. Unofficially? This is where things get very murky. Gray withdrew his license with IBFX on October 1, 2005 and applied for a new one with a newly created FCM, Forex Liquidity, on October 28, 2005. It was at FXLQ where Gray would cook up his piece de resistance, concocting an imaginary $35 million bond out of thin air and using that to pad FXLQ's official adjusted net capital number. I won't rehash the collapse of FXLQ again but if you would like a full recap feel free to go here: Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool While Gray officially cut his ties to IBFX in 2005 there was still a business relationship between the two as evidenced by the fact that FXLQ was a prime provider of liquidity to IBFX. A debate has risen on the bulletin boards as to how dependent IBFX was on FXLQ in providing it with liquidity. In particular one dubious poster on FX Street claims IBFX for a long time was merely a white label of FXLQ and was somehow bound to Robert Gray for life: Forex Street Weblog: InterbankFX related to FXLQ?.... I do not think so Quote:
Gray has been linked to numerous firms from FXDD, to Spencer Financial to Velocity FX. Google him and his name appears all over the bulletin boards like a plague bacillus. Forums - Any Recommendation for MT4 based Fx Broker http://forexbastards.com/forum/inde...96&min=0&num=15 MoneyTec Traders Community Forum So deep is his influence that he even pops up in China heading up another fx brokerage called MultiBank FX (great mugshot of Gary on page 7): http://www.fxmultibank.com/pdf/brochure.pdf And while IBFX may still be up and running their relationship with Robert Gray has cost them dearly as FXLQ owes Interbank over $10 million in frozen assets according to FXLQ's own Receiver: http://www.robbevans.com/pdf/forexlqreport01.pdf It's my hope that the new NFA Capital Requirement increase to $5 million will help weed out the Robert Grays of the FX World. Gray flourished in the weeds of the industry at small firms that never seemed to get the NFA's attention. But with the industry reduced to 24 domestic firms and with new rules set to require all Introducing Brokers be licensed his time will have come and gone and none too soon. 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...
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