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

Broker Discussion Forex Brokers
131

Only days after the President of the NFA told the Congress he wanted them to raise the minimum capital requirement to $20 million the CFTC signed off on the NFA’s current capital requirement increase to $5 million. And they are not waiting around till 2008. Firms need to have the money in the bank by DECEMBER. That’s right around the corner.

With the forex industry rapidly changing before our very eyes I wanted to put together a much more comprehensive list of the industry’s financial status. Therefore, I have included every single registered Forex Dealer member and listed their Adjusted Net Capital. Since I first started posting about the NFA proposal over a dozen firms have gone out of business. Two others have merged and several others are staring death in the face. It is astonishing that firms like Hamilton Williams (Velocity FX) can operate only $4,000 above the minimum needed to stay in business. How on earth can such a firm survive a few months from now when they’re practically pushing up the daisies already? Here is the direct link for the CFTC capital reports: Financial Data for FCMs

Firms Under $5 Million
All these firms are reporting adjusted net capital below the $5 million mark as of the latest CFTC report. Some should be able to raise the necessary capital. Others clearly will not. Which ones can and can’t will be anybody’s guess. Already one of these firms, One World Capital, is not allowing customers to withdraw money.

Hamilton Williams ($1,004,000)
IG Financial Markets ($1,010,000)
Advanced Markets ($1,042,000)
One World Capital ($1,078,000)
Direct Forex ($1,117,000)
SNC Investments ($1,130,000)
Wall Street Derivatives ($1,220,000)
I Trade FX LLC ($1,801,000)
Solid Gold Financial ($1,955,000)
CMC Markets ($2,330,000)
MB Trading ($2,393,000)
GFS Futures & Forex ($3,259,000)
E FX Options ($3,342,000)
Forex Club ($3,715,000)
Easy Forex ($4,731,000)

Firms Under $20 Million
These firms all meet the coming minimum adjusted net capital requirement. However, there are other capital requirements that as market makers these firms (HotSpot excepted in some cases) will need to meet in addition to the minimum $5 million. Most firms will likely need $10 million to be in compliance with the NFA’s rules. Clearly firms like Money Garden are not in the clear just yet.

Money Garden ($5,162,000)
HotSpot FX ($5,990,000)
IKon ($7,130,000)
ODL Securities ($10,822,000)
CMS Forex ($11,849,000)
IFX Markets ($12,293,000)
PFG Forex ($12,781,000)
FX Solutions ($15,077,000)

Firms Over $20 Million
These are the most well capitalized firms in the industry and two years from now may very well be the only firms left in the industry if Dan Roth and the NFA have their way and increase cap requirements to $20 million.

Interbank FX ($25,178,000)
Gain Capital (29,061,000)
Forex Liquidity ($39,909,000)
FXCM ($50,465,000)
Oanda ($50,837,000)
GFT Forex ($54,662,000)

Firms No Longer in Business
These are the firms that have gone out of business since I began posting on the forum. That’s a quarter of the industry in just a few months. And one of those firms, Nations LLC, has gone into bankruptcy and customers can’t get their money back, and may never get their money back.

Bacera Corporation
Cal Financial Corporation
FiniFX
Forward Forex
FX Option1 Inc.
Nations Investments
Performance Capital International
Spencer Financial
Tradex Swiss AG
Trend Commodities
United Global Markets
Worldwide Clearing

Firms that Merged
These are the firms that could not make the new capital requirement on their own and decided to merge with larger players as a result.

American National Trading Corp (Merged with PFG)
Royal Forex Trading (Merging with IKON)

Summary
It is a very turbulenet time in the forex industry. My advice is what it has always been, do not trade with a poorly capitalized firm. And if you must, at least wait until after the December 17, 2007, deadline before putting any money on deposit with any firm that is not meeting the current minimum capital requirement.

132

Stay Tuned, new Capital Numbers should be out from the CFTC any day now.

133

Two of the biggest FX Brokers are preparing for the coming increase in capital requirements by loading up their balance sheets.

First, Oanda has landed $100 million in funding:
Oanda Gets $100 Million Venture Capital Investment - 2007-09-18 11:22:59 | Venture Capital News

Online currencies information and trading system Oanda Corp has received a $100 million investment from a consortium of firms, the company announced Monday. The consortium is led by New Enterprise Associates and includes Legg Mason (LM), Cascade Investment LLC and T. Rowe Price Group Inc. (TROW). The proportion that each firm is contributing to the investment wasn’t disclosed.

Michael Stumm, co-founder of Oanda, told Dow Jones Newswires that the investment wasn’t aimed at financing any particular projects. “It’s primarily to beef up our balance sheet,” he said. “We’re a market maker and we’re in the financial services industry so the balance sheet plays an important role.”

Meanwhile, FXCM has released its own balance sheet to the general public:
FXCM Group Releases Updated Financial Data - Forum - FXstreet.com

Balance Sheet (Unaudited)
AS OF AUGUST 31, 2007

CUSTOMER CASH 296,474,636

OPERATING CASH 96,311,380

OTHER ASSETS 19,666,212

FIXED ASSETS 9,821,211

TOTAL ASSETS 422,273,439

CUSTOMER DEPOSITS 296,474,636

OTHER LIABILITIES 5,662,597

TOTAL LIABILITIES 302,137,233

FXCM CAPITAL 120,136,206

TOTAL LIABILITIES AND FXCM CAPITAL 422,273,439

Drew Niv, CEO of the trading firm, commented: �FXCM is proud of our continued financial discipline and strong balance sheet. We believe clients should have the necessary information to make intelligent choices.�

FXCM also commented on the proposed increase in capital requirements and stated:

Although this new $5 million capital requirement has yet to take affect, NFA�s president and Chief Executive Officer has already testified before congress that capital levels for Forex Dealer Members should be raised to $20 million.

Forex Capital Markets, LLC, an NFA member firm, is the US regulated entity of the FXCM Group. As of August 31, 2007 Forex Capital Markets, LLC had an adjusted net capital of $60,268,390.

According to Niv, �The financial resources for FXCM (Forex Capital Markets, LLC) far exceed both the recently announced increased $5 million capital requirement level as well as the $20 million capital level proposed by NFA�s president and CEO in his recent congressional testimony.�

So what are the smaller firms waiting for? Why haven’t we been hearing these kinds of reassuring statements from the poorly capitalized firms under $5 million? Are they going to be able to meet the coming $5 million capital requirement due in just two months? Why aren’t these firms releasing their own balance sheets? Many of the firms under $5 million claim to have additional resources they are not reporting. So why don’t they tell us about these “unreported assets.” The silence from the sub-$5 million fx brokers is deafening. And it should be a warning sign for traders to beware doing business with them until it becomes clear that they actually have a future.

134

The new capital numbers are out. Here is the most comprehensive list available of the industry’s financial status. I have included every single registered Forex Dealer Member and listed their Adjusted Net Capital. Since I first started posting about the NFA proposal over a dozen firms have gone out of business. Two others have merged and several others are staring death in the face. Here is the direct link for the CFTC capital reports: Financial Data for FCMs

Firms Under $5 Million
All these smaller firms are reporting adjusted net capital below the $5 million mark as of the latest CFTC report. Some should be able to raise the necessary capital. Others clearly will not. Which ones can and cannot will be anybody’s guess. Already one of these firms, One World Capital, is not allowing customers to withdraw money.

Hamilton Williams ($1,100,000)
IG Financial Markets ($1,014,000)
One World Capital ($1,170,000)
Wall Street Derivatives ($1,237,000)
SNC Investments ($1,247,000)
Advanced Markets ($1,269,000)
Direct Forex ($1,406,000)
Solid Gold Financial ($2,010,000)
CMC Markets ($2,806,000)
E FX Options ($3,055,000)
Forex Club ($3,308,000)
GFS Futures & Forex ($3,403,000)
MB Trading ($4,452,000)
Easy Forex ($4,628,000)

Firms Under $20 Million
These medium sized firms all meet the coming minimum adjusted net capital requirement. However, there are other capital requirements that as market makers these firms will need to meet in addition to the minimum $5 million. Most firms will likely need $10 million to be in compliance with the NFA’s rules. Clearly firms like Money Garden are not in the clear just yet.

Money Garden ($5,505,000)
HotSpot FX ($6,023,000)
I Trade FX LLC ($6,645,000)
IKon ($6,736,000)
IFX Markets ($9,078,000)
CMS Forex ($11,255,000)
ODL Securities ($12,642,000)
PFG Forex ($14,742,000)

Firms Over $20 Million
These are the most well capitalized firms in the industry and two years from now may very well be the only firms left in the industry if Dan Roth and the NFA have their way and increase cap requirements to $20 million.

FX Solutions ($23,062,000)
Interbank FX ($27,110,000)
Gain Capital (36,679,000)
Forex Liquidity ($38,317,000)
GFT Forex ($48,302,000)
FXCM ($60,268,000)
Oanda ($156,467,000)

Firms No Longer in Business
These are the firms that have gone out of business since I began posting on the forum. That’s a quarter of the industry in just a few months. And one of those firms, Nations LLC, has gone into bankruptcy and customers can’t get their money back- and may never get their money back.

Bacera Corporation
Cal Financial Corporation
FiniFX
Forward Forex
FX Option1 Inc.
Nations Investments
Performance Capital International
Spencer Financial
Tradex Swiss AG
Trend Commodities
United Global Markets
Worldwide Clearing

Firms that Merged
These are the firms that could not make the new capital requirement on their own and decided to merge with larger players as a result.

American National Trading Corp (Merged with PFG)
Royal Forex Trading (Merging with IKON)

Summary
It is a very turbulent time in the forex industry. My advice is what it has always been, do not trade with a poorly capitalized firm. And if you must, at least wait until after the December 17, 2007, deadline before putting any money on deposit with any firm that is not meeting the current minimum capital requirement.

135

The Boston Business Journal ran another article on the shenanigans going on over at Tradex Swiss Ag:
Immigrants trapped in forex mess - Boston Business Journal:

Like most Swiss firms Tradex Swiss AG is not regulated and customers have been burned as a result. Please note the following Swiss firms ARE NOT REGULATED and should be avoided lest you end up like the poor sods at Tradex Swiss AG:

ACM
Dukascopy
WestCapFX
MIG
GFX Group (Forex.CH)
Crown Forex

[b]Immigrants trapped in forex mess
by Jackie Noblett Journal staff

Z. Song was amazed by the size of her friend’s new house.

The Westford resident asked her friend, who never had a full-time job, how she and her husband were able to buy their new home in Acton. The friend said her husband invested money with Tradex Swiss AG, a Boston money manager that specialized in foreign exchange trading. Song recalls being told she should trade, too.

“They would never lose money, always make big money,” Song said in an interview.

Little did Song know that her friend’s husband, David Qi, was getting paid, according to his lawyer, to refer friends to the unregistered forex trading company. Song also maintains she had no idea that, just three months after her initial investment, her money would be locked up in a legal battle involving Tradex and its regulators. Tradex is now being investigated by governments on both sides of the Atlantic for trading currency without being properly registered, and over $4 million in investment accounts hangs in the balance.[/b]

The rest of the article requires a subscription but essentially contains tales of misery and woe from traders whose funds are frozen in the shuttered swiss brokerage. Of interest in this sordid tale are the actions of Tradex salesmen who were STILL soliciting customers to trade even as Tradex was going under!

In the midst of the investigation, email communications provided to the Boston Business Journal by former Tradex investors show that company continued to solicit business from customers.

A July 25 e-mail from a Tradex broker said that the operation had opened an account at Sovereign Bank for future trading. “In the future, please wire your fund to this account,” the e-mail states.

So basically Tradex was encouraging traders to purchase tickets on the Titanic right after it had struck an iceberg. Talk about a complete lack of ethics.

This is a very important point to remember. Small forex brokers that are in financial trouble rarely let customers know they are in trouble ahead of time. Indeed, as Tradex shows, they will go so far as to cover up that trouble to their own customers and encourage them to keep sending in money even when all is lost.

This is why traders should never invest money with a poorly capitalized/unregulated firm. These firms can unwind rapidly and by the time the average trader finds out it is way too late to do anything about it.

136

Well the folks over at IKon can’t be too happy with the news that the NFA has filed suit against RFXT and accused them of fraud in a new complaint:
BASIC Case Summary

IKon recently merged with former Dead Pool Member Royal Forex Trading and on RFXT’s website they are listed as being a “division of IKon Global Markets.”

So how does IKon feel about a division of its company being charged with the following:
“CHEAT, DEFRAUD, DECEIVE FOREX CUSTOMERS”

The NFA summarizes their complaint as follows:

On September 14, 2007, NFA issued a Complaint charging Royal with using misleading and fraudulent promotional material; failing to uphold high standards of commercial honor and just and equitable principles of trade; and failure to collect and maintain the required security deposit. The Complaint also charged Royal and Marsch with failure to supervise.

Perhaps the most illuminating aspect of the NFA Complaint against RFXT is this doozy about how Royal Forex clears its trades. NFA cites an IB that RFXT uses and in the process reveals how RFXT clears its trades:

InterBank Group’s website also contained statements that falsely implied that customers would be trading in the interbank market. For example, the website included such claims as, “InterBank Group clients routinely benefit from the size and strength of one of the world’s largest online foreign exchange providers,” and “with access to over $1 billion in liquidity from the world’s top FX banks, InterBank Group is able to pass along bank level pricing to our clients through our clearing firms.”

In reality, customers hardly enjoy “bank level pricing” as InterBank Group widens the spreads from the prices that it receives from Royal by as much as 39 pips. Further, Royal offsets its forex exposure with IFX Markets, Inc., an NFA Member FDM, which in turn offsets its exposure with IFX Markets, Ltd. Thus, it was misleading for InterBank Group to suggest that its customers receive the same prices that banks and other institutions do, as the spread InterBank Group charges its customers is widened from the spread on prices that IFX Ltd. receives from its counterparties.

Lol! This is another downside of trading with poorly capitalized firms. Firms like RFXT do not have the kind of trade volume needed to get access to the best prices in the interbank market (although that doesn’t stop these same firms from exagerrating their access to “interbank pricing.”)

As it stands Royal Forex trading is clearing its trades through IFX? How on earth are you going to get good pricing trading with RFXT when they have to go cup in hand to one of their competitors to get their quotes? Why can’t RFXT get a line of credit with a bank like the larger players get? The fact that they can’t should send up red flags that these firms are far riskier to trade with than the more well established players.

The more you learn about how smaller forex firms operate (the fraud, the insolvency, the lousy pricing) the more traders should thank their lucky stars the NFA has raised capital requirements to $5 million because this industry is badly in need on an enema.

137

forex savior, I for one am very thankful that you have taken the time to carry on this thread. I was thinking about opening an account with a dealer (FXDD) who is not a member of the NFA. They indicated that their parent company is Tradition Inc (North America). They in turn are wholly owned by Compagnie Fananciere, a swiss company. Do you have any advice as to what things you would look for and where to look to gain some level of confidence in the security of your funds? Or would you simply advise against opening an account with a non-nfa member?

138

Be very wary of trading with an unregulated broker, FXDD is unregulated which means no one is watching them. That is a major red flag every trader should look out for.

139

The NFA made another announcement about the coming increase in Capital Requirements stated below:

NFA announces effective date for increased minimum net capital requirements for Forex Dealer Members

Beginning on December 21, 2007, NFA Forex Dealer Members (FDMs) will be required to maintain a minimum net capital requirement of $5 million. The increase also raises to $10 million the amount of capital required for a security deposit exemption under NFA Financial Requirements Section 12(b). The amendments to NFA Financial Requirements Section 11 and the Interpretive Notice entitled “Forex Transactions” were approved by the Commodity Futures Trading Commission (CFTC) in late September.

“We have taken these steps because a Forex Dealer Member’s activities create greater financial risks than the type of transactions involved in traditional exchange-traded futures and options,” says NFA General Counsel Tom Sexton. "The increased capital requirement will result in greater customer protection."
FDM capital requirements have been a great cause of concern recently. During the past ten years, NFA has issued 11 emergency enforcement actions against FDMs for failing to demonstrate compliance with NFA financial requirements. In addition, since March 2007, nine different FDMs have fallen under the early warning requirement of $1.5 million.

“Customers trading off-exchange forex do not receive a priority under the Bankruptcy Code in the event of a firm’s insolvency,” says Sexton, "so it’s crucial that FDMs have adequate capital."
NFA is closely monitoring its FDMs to ensure that those firms that wish to continue operating past December 21 will take the necessary steps to meet their new financial requirements.

The following firms, according to the latest CFTC Report, do not meet the coming $5 million requirement:

Hamilton Williams ($1,100,000)
IG Financial Markets ($1,014,000)
One World Capital ($1,170,000)
Wall Street Derivatives ($1,237,000)
SNC Investments ($1,247,000)
Advanced Markets ($1,269,000)
Direct Forex ($1,406,000)
Solid Gold Financial ($2,010,000)
CMC Markets ($2,806,000)
E FX Options ($3,055,000)
Forex Club ($3,308,000)
GFS Futures & Forex ($3,403,000)
MB Trading ($4,452,000)
Easy Forex ($4,628,000)

140

The last few weeks I have been enjoying the NFL season and thus my posts have not been as prolific as they were over the summer. However, it has come to my attention that the NFA has actually increased the minimum capital requirement to $10 million, NOT $5 million. Huh? Allow me to explain.

If you look at the text of this NFA Notice (National Futures Association | News Center) you’ll see the nfa says:

A Forex Dealer Member must have $5 million in adjusted net capital as of December 21, 2007. This increase also raises to $10 million the amount of capital required for a security deposit exemption under NFA Financial Requirements Section 12(b). Since this is a significant change to the qualifications for the exemption, Members that are currently operating under Section 12(b) should notify NFA’s Compliance Department whether they intend to continue using the exemption.

What is this exemption you say? The exemption allows firms to offer customers margin of lower than 2%. In fact, the standard margin rate for customers in the forex industry is 1% with some firms like Money Garden offering margin as low as .25%.

And so the question is will these firms be able to meet the new $10 million requirement, or, will they have to change their entire business model and dramatically raise margin requirements on all their customers?

It’s safe to say if they do not have the mimumn $10 million (and let’s not forget there are many other capital requirements forex brokers have to meet in addition to the minimum) they will have to raise margin requirements on all their customers which will in turn result in many, if not most, of their customers to close their accounts so that they can trade somewhere else at a better margin level.

Once again, this calls into question just how stable are these firms? The NFA is turning this industry upside down. There is no way of knowing who will survive in December. Traders need to beware. These are the firms most vulnerable to these coming cap increases:

Hamilton Williams ($1,100,000)
IG Financial Markets ($1,014,000)
One World Capital ($1,170,000)
Wall Street Derivatives ($1,237,000)
SNC Investments ($1,247,000)
Advanced Markets ($1,269,000)
Direct Forex ($1,406,000)
Solid Gold Financial ($2,010,000)
CMC Markets ($2,806,000)
E FX Options ($3,055,000)
Forex Club ($3,308,000)
GFS Futures & Forex ($3,403,000)
MB Trading ($4,452,000)
Easy Forex ($4,628,000)

If you are trading with one of these brokers be sure to ask them if they are going to meet the TEN MILLION DOLLAR REQUIREMENT and if not, when will they start raising their margin requirements on their customers?

141

Pls Ive been planning to Start trading with Fxcast But I dont Know if they are reliable.Pls can u tell me if they are? and if They Are not Pls Can you recomend one that uses meta trader 4 ,accepts e-gold and accepts $50-$100 for mini accounnts.
Ive been searching the net for too long.It Would be so great if you could help me out .Thanks

142

Thanks for the List .
But can u provide info on FXcast. Also , this Organization that will be closing down firms does it have power over firms all over the world, or does its power cover only the United States.

143

Hi Nabo, I have never heard of FXcast. I don’t think they are a U.S. based firm. You have a web address?

144

dear Forex Saviour
What about the Organization ? I mean does it have power over all firms or is it only firms in the US that will be affected cause fxcast is not from the US?
My Box is <[email protected]>

145

NFA only has power over firms registered in america

146

According to the most up to date CFTC Report on file for Hamilton Williams (dba Velocity4x) this firm’s future is in grave doubt. Hamilton Williams only has $1,100,000 in adjusted net capital. That leaves them a scant 100 grand over the required adjusted net capital requirement. How dire is the financial situation over at Velocity? Dire enough that the NFA last spring charged Hamilton Williams with a bucketful of financial violations:

BASIC Case Summary
� C.R.2-10 - RECORDKEEPING FCMS/IBS
� F.R.SEC11(b)NEW - FDM TAKE CONCENTRATION CHARGE-UNAFFILIATED
� F.R.SEC11(a)NEW - FDM MAINTAIN ADJUSTED NET CAPITAL
� F.R.SEC12NEW - SECURITY DEPOSITS FOR FOREX TRANSACTIONS WITH FOREX DEALER MEMBERS

This is pretty serious stuff. This isn’t like getting slapped with a fine for failing to put an asterisk on a marketing brochure. These allegations go right to the heart of whether or not Velocity4x is even viable as a company. Here are some statements from the NFA’s Complaint:

[b]“Hamilton failed to take the applicable concentration charge on transactions with unregulated counterparties. This failure resulted in the overstatement of Hamilton’s net capital by over $275,000.”

“Hamilton failed to maintain the required minimum adjusted net capital as of July 31, 2006.”

“Hamilton was below its minimum adjusted net capital requirement from July 31, 2006, through September 4, 2006.”

“Hamilton failed to collect and maintain the required security deposits as prescribed by NFA Financial Requirements Section 12(a)”[/b]

Wow. And these guys are going to be able to come up with $10 million two months from now? (Velocity offers 100:1 leverage which means they’ll need $10 million MINIMUM to stay in business.) Where is this money going to come from? What venture capitalist is going to put his money into a company that has just been charged by the NFA with a whole host of bookkeeping violations that could get it shut down? I fear the future won’t be bright enough for Hamilton Williams’ execs to have to wear shades.

147

The New Cap Numbers are out! With the exception of MB Trading (now at $5,190,000) there has been no indication from the poorly capitalized firms on this list that they are shoring up their financials in preparation for the big cap increase to $5 million due in just 6 weeks. In fact one firm, Direct Forex, is reporting that they are in violation of the minimum capital requirement by $276,000!

Meanwhile, the $10 million minimum capital requirement for firms offering 100:1 leverage is proving to be a big barrier as well. How that plays out remains to be seen. But things might really get wild in the forex industry the next couple of weeks.

The following firms, according to the latest CFTC Report, do not meet the coming $5 million requirement:

Direct Forex ($762,000)
IG Financial Markets ($1,017,000)
Advanced Markets ($1,216,000)
Wall Street Derivatives ($1,231,000)
SNC Investments ($1,301,000)
One World Capital ($1,408,000)
Hamilton Williams ($1,453,000)
CMC Markets ($2,001,000)
Solid Gold Financial ($2,101,000)
GFS Futures & Forex ($3,078,000)
E FX Options ($3,752,000)
Forex Club ($3,989,000)
Easy Forex ($4,351,000)

The clock is ticking. Are your funds safe?

148

The Ten Million Dollar Capital Requirement affects ONLY those firms that trade at a margin level of greater than 100:1

So which firms in the Dead Pool are directly affected by this? Well, not many. IG index would be affected if they actually solicited customers in the U.S. but it appears their U.S. registration is just a shell. GFS Futures & Forex offers 200:1 mini accounts on their website. Thus this rule could have a major impact on their business. But the firm that stands to lose the most is Money Garden. MG Forex is notorious for offering 400:1 “Flex” accounts and this new rule could turn the firm upside down. Here is a quick rundown after looking at each firm’s website.

IG Financial Markets ($1,017,000) [700 to 1 leverage]
Advanced Markets ($1,216,000) [100 to 1 leverage]
Wall Street Derivatives ($1,231,000) [Unknown]
SNC Investments ($1,301,000) [100 to 1 leverage]
One World Capital ($1,408,000) [100 to 1 leverage]
Hamilton Williams ($1,453,000) [100 to 1 leverage]
CMC Markets ($2,001,000) [100 to 1 leverage]
Solid Gold Financial ($2,101,000) [100 to 1 leverage]
GFS Futures & Forex ($3,078,000) [200 to 1 leverage]
E FX Options ($3,752,000) [100 to 1 leverage]
Forex Club ($3,989,000) [100 to 1 leverage]
Easy Forex ($4,351,000) [50 to 1 leverage]
Money Garden ($5,507,000) [400 to 1 leverage]
Ikon ($7,562,000) [Unknown]

149

Looks like the Savior missed this big development. Gain Capital bought out Direct Forex. So scratch them from the list. Here is the official Direct Forex Statement:

Dear Direct Forex Customer,

As you already know, Direct Forex LLC (�Direct Forex�) will be transferring the custody and clearing of all forex accounts to Gain Capital on Wednesday, August 29th 2007. Please keep in mind that it is important to liquidate any positions by the close of business, 4:00PM (CDT) on the aforementioned date. All open positions will be liquidated to facilitate the transfer of the accounts to Gain Capital.

For your convenience, we have attached a link that allows you access to Gain Capital�s two proprietary trading platforms. These platforms can be accessed through Direct Forex� website (www.directforex.com) and by clicking on the link http://www.directforex.com/products/demo1.aspx. Please take time to familiarize yourself with these new trading platforms in order to minimize any disruption to your trading.

Please keep in mind that Gain Capital is in the process of integrating MetaTrader 4, and is confident that the system will be available on or around October 1st, 2007. Direct Forex appreciates your business and will keep you informed of any updates.

Sincerely,
Direct Forex

150

So imagine one fine morning you wake up feeling bright and chipper. You have your morning coffee and scrambled eggs while listening to the banality of the local weather report. You look across the tv screen and see the currency rates scroll by. Hmmm, time to log into your currency trading account to see how your positions look. You are still long USD/JPY where you are taking a beating, hoping the pair will make a come back. In the meantime at least you can console yourself with the interest rate yield you�re getting.

But not anymore. Because if you�re a customer of E-FX Options you are spitting out your coffee at your computer screen right about now. Why? Because without almost any notice E-FX is closing its doors and liquidating all customer positions in two weeks.

Now had you been reading Forex Savior�s reports all along and taken him seriously you could have closed your account months ago knowing E-FX was a poorly capitalized firm that was well below the coming $5 million capital requirement. But for those poor sods stuck in positions at this doomed firm you are about to get the margin call from hell. Meanwhile, the rest of E-FX�s customers can expect the worst trade execution imaginable from a firm about to slip beneath the waves. Run Forrest, Ruuuuuuuuun!

Dear Customer,

We regret to inform you that due to the restructuring of E-FX Options, LLC (�E-FX�), that the trading platform will cease service on 30 November 2007. Arrangements are further explained as follows:

Effective 30 November 2007 at 5:00 pm US Eastern Standard Time (1 December 6:00am Peking Time), E-FX will no longer be the counterparty to customer positions and will not service customer accounts.

All open positions will be liquidated at the closing price on that day and subsequently, the account will be closed. You may also liquidate your positions at any time on or before the close of 30 November 2007 via the platform, at a price for which you find suitable.

Fund withdrawal instructions may be provided to E-FX via the trading platform or by completing the Withdrawal Form on the firm web Site http://www.efxo.com/html/download/e/withdrawal.pdf

In the event that E-FX does not receive withdrawal instructions by December 1st, we will automatically deposit the remaining balance of your funds to the bank account registered with the company in your new account application. If E-FX does not have bank instructions as of 30 November, our customer service department will contact you.

For inquiries, please do not hesitate to contact our customer service manager Joey To at the hotlines listed below.

Lastly, account statements will remain available on the trading platform through 9 December 2007.

We apologize for any inconvenience brought about by the above arrangements!

Yours truly,
E-FX Options, LLC

I like how they “apologize” for any inconvenience. These firms are so irresponsible it spins the head. This firm knew months ago they were not going to be able to make the $5 million requirement and yet they didn’t make the slightest effort to warn their customers ahead of time. They just wanted to milk the cow until the very last moment. Well, the cow is being taken to the slaughterhouse and its E-FX’s customers that are about to become hamburger meat.