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

Broker Discussion Forex Brokers
21

The problem is, no one knows your motivation for pointing any of this out. For one, as has been pointed out on other threads, you seem to be running a side forex business/group, so one might question your motivations for trying to nuke other brokers. Maybe it’s for public notification. Maybe it’s to try and badmouth other competitors. The truth is no one knows.

I haven’t advocated one firm or another, just saying that your slant is one sided. So people can question my integrity, but I’m not saying things like “these people are dead firms walking” or “they’re going bankrupt” - I’m just saying to check with the CFTC and the NFA.

Some of the firms you pointed out had increases in capital in the just released report - one of them you said was “bankrupt” has significantly more funds - because the shot you showed is a snapshot on a single day. It may or may not point out the overall health of a company. What if the company is new per se? That doesn’t mean they’re going out of business. There could be a number of reasons why a company has, say, 2 million in capital, and that doesn’t mean its a dead company. You’re smearing them and they don’t have a chance to respond to you.

If people chooses not to give money to smaller firms, that’s fine, but it’s a stretch to say that they’re all “dead firms walking”.

22

I don’t care what the “motives” are of someone who posts to this board. The question is how accurate is the information? As someone new to the industry I’ll take whatever information I can get on any potential broker I may open an account with. After reading this thread I can tell you I’m much less likely to open with one of these little brokers. Is the person posting the thread trying to “nuke” the little firms? Probably. But better that these bombs go off before I open an account with one of these firms than afterwards.

23

So… if he was working for another small company nuking other small companies, that wouldn’t strike you as suspicious? He’s been right on some companies on there, but other companies that he said were in trouble showed increases in capital on the next report, and others are new companies. That doesn’t mean they’re about to go bankrupt or cheat you, and it’s misleading that he’s characterizing it in the way he does, by using the tone of “Dead Firms Walking.” (if that has a positive tone, I don’t know what it is)

You just said you were less likely to open with one of the smaller firms based on this forum posting, yet you’re wondering whether its accurate. That shows me already that his attempts are working, because you are buying his reasoning based mostly on his word.

I’m not saying he is trying to mislead - there are other threads on other boards which have submitted open ideas on that, and they could all be wrong and he could merely be interested in keeping everyone informed. I don’t know.

What I do know is that there are a number of reasons for some of the things he says or posits, and he’s only presenting one, and in the most negative light possible.

The capitalization requirement increase thing has not happened and it’s not for sure that it WILL happen. People should deal in facts, not speculation.

The new report is at this link:

If you doubt a company, you can contact the CFTC or the NFA to see if they’re in trouble. The first company that was listed in his latest post was committing fraud in terms of talking about the interbank market - that had as much to do with them being in trouble as anything else. And the big companies get fraud complaints too - you can look up their record.

Just do due diligence people - I would hope people wouldn’t make their decisions solely based on random opinions (mine or otherwise) on internet forums. It makes me angry to see people press fud that could be viewed in multiple ways.

24

No more suspicious than I should be of you for attacking the person who started this thread. Such assumptions are already priced into the information being discussed here. Frankly I don’t give a damn about all that. Enough with the witch hunting.

I went to the link you provided. It has very useful information, as did the first link that was provided in this thread. Some of the firms on the list have more money in this newer report, some of them have less money in this newer report. What concerns me as a potential investor is whether or not a firm will be here six months from now. Judging from this new report and what I have read thus far I can’t say the new report makes me feel any more comfortable. All these so called “Dead firms walking” are still very short on funds. And a couple have already gone under. Perhpas six months from now they’ll have more money, or perhaps they’ll be pushing up the daisies. Why take that chance and open an account with them?

25

Wow… one person puts information in a negative light (if there’s a positive or even neutral slant to “dead firms walking”, I don’t know what it is)… I say “check with the regulatory bodies”… and… I’m on the same moral standing as that person. I’m not even saying “invest with those companies - they’re good”.

Wow… just… I’m stunned. I thought the goal here was informing people. Informing with a slant is just as bad as misinformation. I haven’t slammed anyone really - I do have my doubts about savior, but nearly every time, I tempered it with “Maybe he’s right, maybe he’s wrong, I don’t know” to try to be fair to him - I just have a problem with anyone who uses slant to scare. If I’ve been slanted at some point, point it out, so I can apologize for my own slant. I just don’t think it’s slanted to say “call the regulatory bodies” rather than assume “They’re dying” or “They’re bankrupt” as savior did.

[ slant slant slant slant - there, hopefully I got that word out of my system ]

Read the forexfactory thread - it’s all there I guess.

You know what… I’m done with trying to say anything. I’ve said my peace… I’m sure forexsavior will be back here trying to tell people “Oh yes, you’re trying to hide this information from the public” as he did a few posts back. I just fail to see how telling people to do their homework is the moral equivalent of what’s gone on here.

I guess in the end, you have to do what you are comfortable with, I just hope people do more homework than what I see here. If you are trying to inform people Savior, then I wish you well. I just don’t see it in your tone.

26

Well, I did that. I went to the link you provided to the CFTC. And for the most part it confirms what this savior guy has been saying- that the firms on his list don’t have a lot of money. If this new rule goes into place these little firms may have to close up shop. Do you dispute that?

As such I don’t think I’m being a fool for not wanting to take a chance with my money by sending it to a firm where the odds are good they won’t be in business six months from now.

27

So, if I’m just starting a new job, and I have just received my first paycheck, that means I’m going bankrupt because I don’t have a lot of money on hand?

I might go bankrupt if something goes wrong. It doesn’t mean I will go bankrupt. And therein lies the difference for me. He deliberately implied they were all going under, which may not be the case. They might be managing their limited funds very well by limiting who can have an account. They might have a parent company (and I know, despite what he says, that two of those companies do have parents, at least) To say they’re going under implies something different than just saying they don’t have a lot of money.

I don’t have a problem with him saying they don’t have a lot of money (although some of the firms obviously weren’t going bankrupt, as the next report showed them having more money). I have a problem with the tone - “They’re dead firms walking!” “They’re bankrupt!” and then making links to companies that committed fraud as if EVERYONE on that list had committed fraud or will commit fraud by having lower funding.

You don’t want to invest with them? Fine. That’s understandable. But I don’t like the way he phrases it, because it’s scare tactics more than informing. And he has been wrong on some of them.

If this new rule goes into place these little firms may have to close up shop. Do you dispute that?

What is so hard to understand? That may or may not be true. That has nothing to do with his linking of “fraud” to “undercapitalization”. He’s linking the two together like a chain. A fraudulent company might be undercapitalized. An undercapitalized company might be fraudulent. They’re not guarrentees, and they’re not necessarily linked. But he weaves the two seperate threads together to make it sound like his Dead Firms Walking are doing so because of fraud. He makes mention of fraud several times. That MAY or MAY NOT be the case! It’s like he’s deliberately trying to seed the idea of fraud into the readers, so someone skimming the forum will be like “Fraud! Money issues! Bankruptcy! Panic!” That’s irresponsible to me.

And even if that was the case, and the regs were raised, that would be an orderly closing, and not fraud. That certainly would not mean you couldn’t get funds out. I’ve worked for an investment company (not forex) where requirements were raised and some companies had to leave. They didn’t declare bankruptcy - the administering body made them move the accounts to another company. It didn’t mean people had to run for the hills, which is AGAIN the tone implied.

As such I don’t think I’m being a fool for not wanting to take a chance with my money by sending it to a firm where the odds are good they won’t be in business six months from now.

I dispute the “odds are good” part, but that is your choice. My problem is with his phrasing, as I’ve been stating

28

Clikr you really need to go back and actually [B]READ[/B] what the national futures association says in its own proposal, which you clearly have not done because you are acting as if the problems they cite are no big deal.

FACT 1: the vast majority of fraud and insolvencies in the retail forex industry has occurred amongst small retail forex firms. This is direclty from the National Futures Association.

FACT 2: the national futures association is raising capital requirements precisely becaue of fact number one.

FACT 3: when this proposal is adopted (and you can play all the little games you want about how this isn’t going to happen but it most definitely will and when it does I look forward to hearing your apology for trying to pull the wool over everyone’s eyes by downplaying the significance of the rule change) if you don’t have $5 million you will be forced to shut down.

If you don’t like the tone, hey to each his own. But your attempt to cloud these facts by attacking the messenger does nothing to help customers who may lose all their funds when these companies start going under. In fact, they are [B]ALREADY[/B] going under. Why don’t you go explain to the people at UGMFX, whose funds are now frozen, how they have nothing to worry about since, after all, the CFTC report you just linked to still shows them with over $1,000,000 capital!

As for you statement about your experience watching financial firms calmly unwind their business you obviously haven’t been watching how it is done in the forex world. One of the reasons retail fx has such a bad name is precisely because when forex brokers get into bad shape the owners grab the money and head for the hills leaving the customers high and dry. One need only check out the legions of CFTC fraud cases to see the sad history of what happens when a forex broker goes bust.

I think the FX Retail world has a right to know this. You don’t. Fine. But please don’t lecture me on “fairness.” This is real people’s money at stake. Not some academic debate.

29

Uhhh… I have NEVER once said they don’t have a right to know “this”. What I have a problem with is how you portray “this” - one interpretation laced with your spin. I hate to get political, but it’s like when President Bush talked about Iraq, and kept mentioning Al Qaeda - no, he didn’t directly link the two in every speech, but people sure got the impression they were linked from those speeches, because he mentioned them so much in conjunction. When you repeatedly use “fraud” in conjunction with “underfunding” like you do, you’re doing much the same thing. I don’t like it - it’s a trick when the unbridled, unspun truth would have been effective IMO.

You keep trying to put words in my mouth, saying that I think these things are no big deal. I haven’t said that. I also don’t think slandering a pile of companies that may or may not be healthy, may or may not be undercapitalized by a future proposal, and may or may not be around in a year needed to be done - people can evaluate that data without your sensationalism. Many of your examples weren’t busted solely for underfunding, they were committing fraud of varying types and then later were underfunded. That is NOT the same as them being busted solely for being underfunded.

FACT 2: the national futures association is raising capital requirements precisely becaue of fact number one.

How can something be a fact if it hasn’t happened yet? :rolleyes: It’s a proposal. It may go through, it might not go through. Others on other sites have disagreed with the assertion that it will definitely go through. Do I think it will? Probably. Have other proposals by the NFA not gone through in the history of their existence. Also a yes.

FACT 3: when this proposal is adopted (and you can play all the little games you want about how this isn’t going to happen but it most definitely will and when it does I look forward to hearing your apology for trying to pull the wool over everyone’s eyes by downplaying the significance of the rule change) if you don’t have $5 million you will be forced to shut down.

Again, THIS ISN’T A FACT - It’s your opinion that this will be passed along with some spiel. I have not said that people shouldn’t do their homework, I SOLELY disagree with your panic-attack-inducing statements. Others on other boards have questioned your motives, I’ve taken great pains to say that although I have my doubts about your motives, you could be motivated by a need to tell people the truth, and that people should check up on all these companies. How is it pulling the wool over someone’s eyes to say “Hey, maybe you should do your due diligence and not just listen to two guys rambling on an internet forum!”? I could understand your claim if I was saying “Nah, I’m sure all these companies are fine, and I know the NFA won’t pass it”, but I have never once said that or implied it.

You have this problem with the need to try and imply that those who disagree with your tone are trying to hide something - it’s a strawman where you don’t deal with the crux of the argument of the dissentor and try to make them sound like they’re evil. If you can find a point where I said “Nah, these companies are all fine. Go ahead and fund with them” - I’m all ears. (Your best bet would be the “I don’t know what to tell you other than you are wrong on 2 of the companies…The problem is you are disparaging those companies and their business might be damaged when they’ve done nothing wrong.” I still hold that is true, but that is not the same as saying those companies are all fine - and I still encouraged people to call the CFTC/NFA to check on them to be sure of that in that same posting)

Until then, you can stick your “trying to pull wool over the eyes” where it belongs.

And I know you’re having a hard time understanding it, so I’ll state it again clearly. I do think those capitalization requirements will pass. But your opinion that it will happen DOES NOT MAKE IT A FACT, no matter how many times you try and label it as such.

But your attempt to cloud these facts by attacking the messenger does nothing to help customers who may lose all their funds when these companies start going under.

It is not attacking a messenger to point out they put the most negative possible spin on their statement. Had you SOLELY come in and said “These companies appear to be underfunded. Other companies that have been underfunded in the past went under. The capitalization requirements might be raised. Do your homework if considering these companies.” in that tone, you probably never would have heard from me.

That’s NOT what you said though. You came in and said “These firms are dead! They’re bankrupt!” You put links in about 2-3 fraud cases and (IMO) implied that all those firms would be likely to commit fraud on the basis of those cases. Maybe you did it because you really believe they’ll all commit fraud. In light of your comments and people’s responses on other forums online, I don’t believe it. I have been wrong before though, and only time will tell.

As far as an apology if the reqs go through? I’m sorry, you won’t see that, because I don’t think one is merited based on the position I have stated.

30

As a final note, I’m probably done posting and going back to lurking. I really hate debate of this type. I’m sure savior will have some choice comments, and while I’m sure I’ll want to respond, I realize they’ll probably be bad for my blood pressure. That, and the mods will step in at some point and slam the door shut on this post, and I want to give others the chance to respond.

I don’t work for any of the companies that Mr. Savior referred to. I have always disliked his type of sensationalism though in any venue though. I just wonder what damage could be done to legitimate companies on that list on the basis of his conjecture presented as fact. I’ve already seen his piece cut and pasted to forex blogs around the net, so we’ll see what happens.

I know for a fact that he’s wrong on two of the firms not having parent companies. I’m not interested in proving this because I found out simply by doing research - which ANY OF YOU can do on your own. One of them I know is a startup, so I’m not surprised to see they don’t have piles of money on the books - that doesn’t mean they’re about to rip you off. As with any startup company, you should be careful and consider that though as part of your thinking process.

I know people don’t want to be a victim of fraud - I wouldn’t either. All I ask is that you check up on the companies and not assume they’ll defraud you and panic. I would hate to think a startup forex firm was doomed not because they did something wrong, but because someone potentially (and this is just my opinion based on other postings on other boards - so you’ll have to take it with a grain of salt) had other motivations.

The most important rule is do your homework on a company, no matter what.

Good luck to you with all your trading.

31

What’s with all the secrecy? In earlier posts you had no problem linking to the CFTC to show us how much money each firm had. That was research we could have “done on our own.” So who are these two firms? I’m curious now. :cool:

32

My focus here is the “…cheating, defrauding or deceiving another person or attempting to do so and failure to observe high standards of commercial honor and just and equitable principles of trade” part, which I think is the more pointed charge against these firms. The rest of it strikes me as just additional charges which might or might not have been put forth in this way if the companies weren’t screwing people - or alledgely doing so anyway.

33

Okay, seriously, this is the last one…

It’s not secrecy. One is a report cut from the CFTC. The other sources are calls to the CFTC and NFA to ask about said companies. If I quote those phone calls, I’m no better than anyone else at sending unverified sources - so I’d rather refer people to call the reg bodies rather than posting names and saying “This is what I was told when I called and asked.” A little bit of research online seemed to verify that information.

Bottomline, I’m no more credible than the next random post, so you’re best off to check on it. At worst, you have to check like 10 firms to find the two.

I guess if you want to private message me, you can… I’m just wary of posting my phone calls to a forum because I feel it doesn’t make me any better than the rumor mill.

My focus here is the “…cheating, defrauding or deceiving another person or attempting to do so and failure to observe high standards of commercial honor and just and equitable principles of trade” part, which I think is the more pointed charge against these firms. The rest of it strikes me as just additional charges which might or might not have been put forth in this way if the companies weren’t screwing people - or alledgely doing so anyway.

The fraud is very very serious, and seem to lead to the other problems. I’m astounded by some of the NFA reports where they have usually 10 different issues of fraud, some of which had nothing to do with undercapitalization.

34

Clickr your posts are like something out of the twilight zone. If you are so concerned about the rumor mill than why did you even bring up these two firms’ parent companies in the first place? And if you aren’t going to bother to tell us who these companies are then stop referencing them in your posts! Because your failure to reference them gives off the appearance that you are simply making it all up. Which I suspect you are.

35

Because your failure to reference them gives off the appearance that you are simply making it all up. Which I suspect you are.

I only brought them up because I did the checking on those. To the respect that it is adding to the rumor mill, I apologize. That was probably a mistake, so I’m trying to correct it now by not repeatedly using it, but… it’s hard not to get aggravated when I know better because I checked… arrrrgggh. Soooooo, I’m trying to correct that - and I’ll start fully now. If the private message is a problem - I’m trying to find a way to be informative. I thought this would allow people to ask without posting it in public forum. But no one has PM’d that I’ve seen, and to be fair, I won’t respond that way if you think that makes some conflict of interest. I can see that someone would say it’s still providing information, so you’re probably right - they should call the NFA/CFTC. If you look at the sheet though, it should be obvious that some of the companies are obviously not bankrupt like it was said last month, and some have healthier balances.

To the larger point where you seem to doubt my credibility - what possible motivation would I have to saying I’ve checked on two companies to be underhanded, then encouraging people to do their due diligence to check themselves? Wouldn’t it make more sense to use other methods if I were trying to solicit for two companies on that list? Wouldn’t I not want people to check with the regulatory bodies? Can you construct a scenario where I’m trying to defraud people into investing with these companies based on what I’ve said with regards to calling the CFTC or NFA? If you can’t, I don’t understand what you’re implying. And you certainly don’t seem to ask for that same information from other people here. I can’t think of any case where a person committing fraud would be saying “Call the authorities and ask them.”

I’ve already openly said I don’t work for any of the companies on the “dead” list. Can I make it clearer than that? How can I make it clearer?

With regard to my larger point, clearly you have no problem with someone attributing fraud to potential undercapitalization based on a proposal that hasn’t yet passed. I think that’s… a shame and problematic at best, but that’s your opinion.

In all seriousness, I’m done with responding… really. One person (Fat Tony) seems overly fixated on one sentence from like… 3 of my posts, and to that end, it’s distracting from my main point on the tone of the starting posts in this thread. I don’t blame him for looking for some ulterior motive in my statement (although I think it’d be nice if he’d do the same for others in this thread), and to that end, I’m just tired. So please leave me out of this discussion now… or send me an email if you really feel you must “put me in my place.”

36

It’s a shame you guys got so involved over nothing

37

As I continue to update the dead forex firms walking list I’m amazed how many people think fraud and undercapitalization are completely separate issues. Often times they are not. The reason is quite simple: firms that are committing fraud are not known for having legible books. And Vice versa. Firms that have a hard time maintaining their capital requirements will often cut corners and commit fraud to keep their firms from going under. Finally, smaller firms simply don’t have the money to maintain the kind of large legal and compliance staffs necessary to keep up with the battery of regulations being issued by the NFA and CFTC. And of course some firms are just plain incompetent. All these factors have come to a head with Forex Dealer Dead Pool Member [B]One World Capital[/B], who is now in serious trouble with regulators.

To see the full report on One World’s misdeeds you can click on the NFA’s report yourself: http://www.nfa.futures.org/BasicNet/CaseDocument.aspx?seqnum=1190

I have highlighted some of the worst allegations below. After reading through them I think you’ll understand why One World is on the dead firm’s walking list and why that should be serious cause for concern for anyone who has an account with them or any firm like them.

[B]“One World lacked an understanding of, or was inattentive to, regulatory requirements and was ill prepared to accept customer business as either an FDM or an FCM. The firm had not established adequate systems to enable it to handle customer funds or comply with customer reporting requirements.”[/B]

[B]“The firm was unable to properly account for its liabilities to its forex customers.” (Insert appropriate jaw dropping sound. This is the text book definition of a firm destined to go bankrupt.)[/B]

[B]“In addition, NFA’s audit found that One World and Walsh [Principal] provided false and misleading information to NFA auditors concerning an individual names Charles Martin and his role at One World. Walsh said Martin had no involvement in the firm. However, NFA subsequently learned that Walsh’s claim was untrue and that Martin was, in fact, heavily involved in the operations of One World and solicited customers on its behalf.” (Who is Charles Martin you ask? The NFA states Martin was turned down to be a principal before because of a “felony drug conviction and a misdemeanor theft conviction.”)[/B]

It goes on and on, misleading promotional materials, outright lies to regulators, failure to report capital and maintain any semblance of book keeping standards. In short, One World is a classic Dead Forex Firm walking. Firms like One World are the reason the NFA is going to raise capital requirements. And when they do, does anyone honestly believe the One World’s of the world will survive?

38

True enough. But small doesn’t necessarily mean fraudulent, just as large doesn’t necessarily mean free of fraud. In fact, in some ways there could even be an increased risk of misdeeds at a larger firm just because of the amout of money involved.

39

Exactly.

This post also kind of explains the things I wanted to say, but was not eloquent enough to say. (it was posted in response to essentially a copy of this same post on that forum)
Forex Factory - View Single Post - EFX Group - Introduction

40

I’m not familiar with efx. Does anyone here use this broker?