I really find it amazing that they let TeamForex do that without ever having to put up proof in the form of an audited track record like every single CTA is forced by law to put up.
Does anyone have a legal opinion on that, why he can just surf boards to solicit funds without proof of trading success, while CTA's need to put up audits of their track records?
One reason I found out why he always staunchly defended FXCM/REFCOFX, when there really isn't all that much to defend, is the kickback scheme they have on offer:
"FXCM Customer Agreement/ Referral Disclosure/ #8
Client understands and acknowledges FXCM may comensate Reffering Agent for introducing Client to FXCM and that such compensation may be on a per- trade basis. Such compensation may incur a mark-up, above and beyond the ordinary spread generally provided by FXCM. Further the Client has the right to be informed of the precise nature of such compersation."
http://www.moneytec.com/forums/_sho.../_threadid-5864
Seems to me a lot of these questionable firms like TeamForex have a business relationship with this particular market maker FXCM charged with a major fraud investigation by the CFTC:
New York (Feb 16) â Forex Capital Markets, LLC (FXCM), the New York-based foreign currency dealer, has been charged in a major fraud investigation being prosecuted by the U.S. Commodity Futures Trading Commission. A CFTC complaint filed in the United States District Court for the Southern District of Florida yesterday names FXCM, its client Gibraltar Monetary Corporation, Inc., and four Gibraltar employees â Thomas J. Clancy, Charles I. Fremer, Jayson S. Kline, and Edward T. Johnson â as participants in fraudulent currency options trading solicitations. Mr. Kline, the President of Gibraltar, had previously been prosecuted by the CFTC for similar illegal activities in 1993.
FXCM opened at least 267 client accounts through Gibraltar, taking in $3,022,998.29 in client funds. FXCM paid $879,379 in commissions to Gibraltar, even though most of the customersâ funds were lost trading or paid to Gibraltar and FXCM in compensation and fees. FXCM is charged with failure to adequately supervise Gibraltarâs fraudulent activities and reportedly âwas aware that Gibraltarâs customers were not receiving regular monthly account statements.â Furthermore, the CFTCâs complaint states âFXCM knew or should have known about Klineâs disciplinary history because such information was readily available from the NFA of which FXCM is a member.â The CFTC also notes that âGibraltarâs customers were unable to gain access to their account information because FXCMâs website was not functioning properly.â
The Commission entered orders of preliminary and permanent injunction enjoining FXCM, Gibraltar, and the four Gibraltar employees and entered a statutory restraining order against the defendants. FXCM and Gibraltar were also ordered to disgorge all benefits received from the fraudulent activities âand to make restitution by making whole each and every customerâ whose funds were used in their fraudulent activities. Moreover, the CFTC entered an order requiring FXCM and the defendants to pay civil monetary penalties that could potentially total millions of dollars. The CFTCâs motion for a preliminary injunction is scheduled for February 24, 2004 in West Palm Beach, Florida.
FXCM, a registered futures commission merchant, did not immediately return calls with requests for comment, nor did Refco Group Ltd LLC, a part owner of FXCM and partner in the FXCM/RefcoFX online trading system. The latest financial information provided by FXCM to the CFTC dated December 31, 2003 shows excess net capital of only $17,658,899. Analysts and industry participants are predicting this fraud will have a sizeable impact on FXCMâs client base, especially if more than $3 million in clientsâ funds were involved in the fraudulent activities.
For more information, the CFTCâs complaint and order can be found at http://www.cftc.gov/opa/enf04/opa4892-04.htm.
http://www.forex-markets.com/NewswireFXCM.htm