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Proposed NFA Capital Requirement
- Thread starter forexsavior
- Start date
NFA Puts in the Boot on Royal Forex
Royal Forex may no longer be an independent company but that doesn't mean it still doesn't have sins to pay for. Today the NFA fined them $75,000 for the kind of standard, run of the mill incompetence that we've all come to expect from the poorly capitalized. Below is a summary of the NFA's Decision:
The guys at IKon really have their hands full...
Royal Forex may no longer be an independent company but that doesn't mean it still doesn't have sins to pay for. Today the NFA fined them $75,000 for the kind of standard, run of the mill incompetence that we've all come to expect from the poorly capitalized. Below is a summary of the NFA's Decision:
NFA orders Florida forex firm and its CEO to pay a fine of $75,000
December 13, Chicago - National Futures Association (NFA) has ordered Royal Forex Trading LLC (Royal), formerly known as Freedom FX LLC, and its chief executive officer, Justin J. Marsch, to pay a fine of $75,000. Royal is a Futures Commission Merchant and Forex Dealer Member located in Boca Raton, Florida. The Decision, issued by NFA's Business Conduct Committee, is based on a Complaint filed in September 2007 and a settlement offer submitted by Royal and Marsch.
The Committee found that Royal and its unregistered solicitors used misleading promotional material and that Royal failed to collect and maintain required security deposits from its forex (foreign currency futures) customers. Additionally, the Committee found that both Royal and Marsch failed to adequately supervise the firm's forex operations.
The guys at IKon really have their hands full...
The Final Countdown
Queue up the music from Swedish Glam Band "Europe" because this week is when the Dead Pool comes to an end. http://www.youtube.com/watch?v=0ZkllM8znx4
This Friday is the NFA deadline for fx firms to meet the minimum $5 million capital requirement. Two updates to report:
GFS Futures & Forex has just made an announcement on their website that they have received a $6 million capital infusion to put them over $10 million thus ensuring a stay of execution from the NFA hangman.
Meanwhile, Velocity4x has thrown in the towel and is handing over their clients to Gain Capital.
The following firms have still not publically indicated they have met the requirement. Beware these firms until further notice:
1) SNC Investments: $1,152,000
They are well below the $5 million capital requirement. It is highly unlikely they will make the new requirement at this point. I advise customers to leave this firm and look for greener pastures.
2) Wall Street Derivatives: $1,228,000
This firm is based out of New Zealand and I'm not even sure they have any U.S. customers as their U.S. website is out of service.
3) Advanced Markets: $1,322,000
Amifx is already teetering on the brink as they are the subject of a business conduct committee case before the NFA in which they are cited for a whole host of financial violations including not meeting the old capital requirement. This firm does not have much of a future.
4) AlpariFX $2,481,000
Little known European firm. Well under the cap requirement.
5) Solid Gold Financial: $2,040,000
Solid Gold's future is now in serious doubt. Like many of the other firms on this list they have been charged by the NFA with failing to meet their existing capital requirement. When you can't meet the old requirement it stands to reason you won't be able to meet the new one either. Solid Gold is anything but a solid investment at this point.
6) Bacera Corporation: $2,300,000
Like a turd that won't flush Bacera Corporation just refuses to go down the drain. The Savior wrote Bacera off over the summer as sources knowledgeable about them stated they were going to close up shop. But no, they are still hustling the folks in LA for fresh deposits. In September Bacera settled a complaint with the NFA after it was discovered they were undercapitalized to the tune of $1.2 million. NFA reported Bacera only has about 200 customers as it is. But to those 200, do yourself a favor and get yourself another broker because sooner or later the pipes are gonna get cleaned and these guys are going to get flushed once and for all.
7) ODL Securities: $2,566,000
Ravaged by undercapitalization issues.
8) Forex Club: $3,320,000
They still have not hit the minimum $5 million mark. And don't forget since they are a market maker they have other financial requirements to meet as well. They still haven't publically done so.
9) Easy Forex: $3,789,000
Under siege for their sleazy sales tactics, it's hard to imagine the NFA isn't going to drop the hammer on them soon.
10) Money Garden: $5,035,000
While they have crept up over the $5 million mark MG is notorious for their 400:1 "flexi" accounts which will require MG put up a minimum $10 million in capital in addition to other financial requirements for being a market maker. They are not even close to doing this despite their CEO's insistence they could easily get the money last summer. It looks like this veteran of the industry is about to be forcibly retired.
Queue up the music from Swedish Glam Band "Europe" because this week is when the Dead Pool comes to an end. http://www.youtube.com/watch?v=0ZkllM8znx4
This Friday is the NFA deadline for fx firms to meet the minimum $5 million capital requirement. Two updates to report:
GFS Futures & Forex has just made an announcement on their website that they have received a $6 million capital infusion to put them over $10 million thus ensuring a stay of execution from the NFA hangman.
Meanwhile, Velocity4x has thrown in the towel and is handing over their clients to Gain Capital.
December 14, 2007
Dear Valued Customer:
In an effort to better serve the needs of our customers, Velocity4x is pleased to announce a new partnership with FOREX.com, a division of GAIN Capital Group. Effective Friday, December 14, 2007 at 5:00 pm ET Velocity4x will transfer all customer accounts to FOREX.com. Following the transfer of your account, FOREX.com will provide all custody, clearing and support functions.
FOREX.com has worked closely with Velocity4x to ensure the transfer of your trading account is as seamless as possible. You may continue to access the trading platform as you have in the past and utilize your existing login and password.
Trading activity in your account after December 14, 2007 will confirm your consent to be bound by the FOREX.com Customer Agreement. A link to the FOREX.com Customer Agreement is provided here for your convenience: Click here to view the FOREX.com Customer Agreement.
If you choose to close your account following the transfer, you may communicate your decision to FOREX.com directly, through email at velocity4x@forex.com or telephone at 908.458.8274 and FOREX.com will honor your request and return your account balance to you.
If you have any questions regarding this transfer you may contact Velocity4x at 312.546.6288 or via e-mail at accounts@velocity4x.com or FOREX.com at 908.458.8274 or via e-mail at velocity4x@forex.com.
Through our new relationship with FOREX.com, we look forward to providing you with superior service. FOREX.com is a registered Futures Commission Merchant and a member of the National Futures Association (NFA ID# 0339826). You may also obtain additional information regarding FOREX.com and Gain Capital Group, LLC on NFA's web site.GAIN Capital's corporate headquarter address is 550 Hills Drive, Bedminster, NJ07921 and its main telephone number is 908.731.0750.
Very Truly Yours,
Velocity4x
The following firms have still not publically indicated they have met the requirement. Beware these firms until further notice:
1) SNC Investments: $1,152,000
They are well below the $5 million capital requirement. It is highly unlikely they will make the new requirement at this point. I advise customers to leave this firm and look for greener pastures.
2) Wall Street Derivatives: $1,228,000
This firm is based out of New Zealand and I'm not even sure they have any U.S. customers as their U.S. website is out of service.
3) Advanced Markets: $1,322,000
Amifx is already teetering on the brink as they are the subject of a business conduct committee case before the NFA in which they are cited for a whole host of financial violations including not meeting the old capital requirement. This firm does not have much of a future.
4) AlpariFX $2,481,000
Little known European firm. Well under the cap requirement.
5) Solid Gold Financial: $2,040,000
Solid Gold's future is now in serious doubt. Like many of the other firms on this list they have been charged by the NFA with failing to meet their existing capital requirement. When you can't meet the old requirement it stands to reason you won't be able to meet the new one either. Solid Gold is anything but a solid investment at this point.
6) Bacera Corporation: $2,300,000
Like a turd that won't flush Bacera Corporation just refuses to go down the drain. The Savior wrote Bacera off over the summer as sources knowledgeable about them stated they were going to close up shop. But no, they are still hustling the folks in LA for fresh deposits. In September Bacera settled a complaint with the NFA after it was discovered they were undercapitalized to the tune of $1.2 million. NFA reported Bacera only has about 200 customers as it is. But to those 200, do yourself a favor and get yourself another broker because sooner or later the pipes are gonna get cleaned and these guys are going to get flushed once and for all.
7) ODL Securities: $2,566,000
Ravaged by undercapitalization issues.
8) Forex Club: $3,320,000
They still have not hit the minimum $5 million mark. And don't forget since they are a market maker they have other financial requirements to meet as well. They still haven't publically done so.
9) Easy Forex: $3,789,000
Under siege for their sleazy sales tactics, it's hard to imagine the NFA isn't going to drop the hammer on them soon.
10) Money Garden: $5,035,000
While they have crept up over the $5 million mark MG is notorious for their 400:1 "flexi" accounts which will require MG put up a minimum $10 million in capital in addition to other financial requirements for being a market maker. They are not even close to doing this despite their CEO's insistence they could easily get the money last summer. It looks like this veteran of the industry is about to be forcibly retired.
Quote from forexsavior:
FXLQ in Complete Chaos
For those of you caught in the FXLQ meltdown this thread at Forex Factory has some excellent information:
http://www.forexfactory.com/showthread.php?t=59150&page=3
This trader posted the following which shows you the incredible maelstrom that FXLQ is currently mixed up in:
If you have money at FXLQ, MultibankFX or any of the other brokers that clear through FXLQ GET YOUR MONEY OUT NOW IF YOU STILL CAN!
And that is why I trade futures, and not forex. Segregated funds are vastly superior to having your funds as part of a broker's "assets". Also, why aren't your funds distributed across multiple brokers?
Quote from rcanfiel:
And that is why I trade futures, and not forex. Segregated funds are vastly superior to having your funds as part of a broker's "assets". Also, why aren't your funds distributed across multiple brokers?
Hit the nail on the head here, established futures firms who employ segregated funds business models are far sappier in all aspects than these FX bucket shops commingling funds firms. Iâm pretty sure CFTC will be cleaning house on most if not all these FX bucket shops, leaving the more established sappier future firms A bigger shear of the retail FX markets/. This would be a great Justus for all retail FX traders.
CFTC Raids One World Forex
Well the CFTC has officially stepped in to put an end to the shenanigans at One World Capital. I have been reporting on the decline and fall of One World Capital for over six months now so this should be no surprise to anyone following this thread. But it appears that there is a serious shortage of funds at One World which is going to result in heavy losses for customers. This is exactly what I have been warning about for several months now.
http://www.cftc.gov/newsroom/enforcementpressreleases/2007/pr5424-07.html
$4 million owed to customers? This will not be a very Merry Christmas for the customers now trapped at One World Forex.
Well the CFTC has officially stepped in to put an end to the shenanigans at One World Capital. I have been reporting on the decline and fall of One World Capital for over six months now so this should be no surprise to anyone following this thread. But it appears that there is a serious shortage of funds at One World which is going to result in heavy losses for customers. This is exactly what I have been warning about for several months now.
http://www.cftc.gov/newsroom/enforcementpressreleases/2007/pr5424-07.html
CFTC Sues Forex Dealer One World Capital Group, LLC and Its President John Edward Walsh for Inability to Demonstrate it had Required Capital
Winnetka, Illinois Forex Dealer May Owe Millions to Customers
Washington, DC â The U.S. Commodity Futures Trading
Commission (CFTC) announced today that on December 13, 2007 it sued One World Capital Group, LLC (One World) of Winnetka, Illinois, a registered futures commission merchant (FCM), and its President, John Edward Walsh of Lake Forest, Illinois, charging them with inability to demonstrate compliance with capitalization requirements and with failure to maintain required books and records.
On the same day the case was filed, the CFTC won an asset freeze and other emergency relief that will enable the Commission to freeze the assets of One World and safeguard the interests of its customers.
The complaint alleges that One World has been unable to demonstrate that it has maintained at least $1 million in adjusted net capital, the minimum requirement needed for FCMs that are Foreign Currency Dealer members of the National Futures Association (NFA).
According to the CFTC complaint, since at least November 28, 2007, One World and Walsh failed to demonstrate compliance with the net capital amount as required by the Commodity Exchange Act and CFTC regulations. As of December 10, 2007, the complaint charges, One World failed to demonstrate that it had any net assets. While One World appeared to possess $554,000 of funds held in customer accounts, since at least November 2, 2007, the NFA has been receiving complaints from customers alleging that they are unable to get their funds back from One World. The complaint alleges that the amount claimed outstanding by customers exceeds $4 million. The complaint also alleges that Walsh conceded an inability to identify all of One Worldâs customer liabilities. Furthermore, the complaint charges One World and Walsh with failing to maintain books and records as required by a CFTC regulation.
$4 million owed to customers? This will not be a very Merry Christmas for the customers now trapped at One World Forex.
Breaking News: FXLQ To Close Its Doors
An email is circulating around the net that FXLQ has apparently sent to their customers. The CFTC is about to sue them. FXLQ is in deep, deep, deep trouble:
http://www.forexfactory.com/showthread.php?t=59150&page=7
An email is circulating around the net that FXLQ has apparently sent to their customers. The CFTC is about to sue them. FXLQ is in deep, deep, deep trouble:
http://www.forexfactory.com/showthread.php?t=59150&page=7
Tuesday, December 18, 2007
To our Valued Clients:
We have temporarily suspended operations due to a Commodity Futures Trading Commission lawsuit filed against the company in Federal Court. Please be assured that as soon as we are able, we will return any messages.
There is a hearing in the U.S. District Court scheduled for January 4, 2008 where we hope to resolve all issues the CFTC has with our company.
Thank you,
Forex Liquidity LLC
One World Sings the Blues
Now that the CFTC has begun their investigation of One World Capital expect some rather unsavory things to come out in the next few months. The Chicago Sun Times just ran this story today on the suit filed against One World:
http://www.suntimes.com/business/703937,121907CFTC.article
So what happened to the money? Well sources are telling me that yesterday Charles Martin threw a big bash at the Chicago House of Blues that cost a fortune. Who is Charles Martin? Well he is the guy who applied with the NFA to become a principal of One World Capital but was turned down because:
http://www.nfa.futures.org/basicnet/Case.aspx?entityid=0273891&case=02REG00017&contrib=NFA
I love Martin's response to the NFA's decision to deny his principalship. He, "did not deny the allegations contained therin. However, he stated that he intended to show that his conditioned registration would not pose a risRk to the public."
Riiiiiiiiiiiiiight. Why didn't he just claim to have found Jesus? The NFA still rejected Martin in any case. But that didn't stop him from running the show at One World. The NFA says in its own complaint against One World earlier this year that "NFA received information that Martin was in charge of One World's entire operation and was acting as an undisclosed principal of the firm."
http://www.nfa.futures.org/basicnet/Case.aspx?entityid=0359973&case=07BCC00017&contrib=NFA
Last month One World "Agreed" to never allow Charles Martin to set foot in their office again in a settlement with the NFA. But looks like the damage has already been done. Within weeks of the NFA's decision the firm went bust. And Mr. Martin can be seen hoisting a Cold Frosty One at a downtown Chicago bar, laughing all the way to the bank...
Now that the CFTC has begun their investigation of One World Capital expect some rather unsavory things to come out in the next few months. The Chicago Sun Times just ran this story today on the suit filed against One World:
http://www.suntimes.com/business/703937,121907CFTC.article
Feds freeze assets of Winnetka trading firm
December 19, 2007
BY DAVID ROEDER Staff Reporter
Federal regulators have obtained a court order freezing the assets of a Winnetka trading firm after customers said it denied them access to their cash.
The Commodity Futures Trading Commission sued the firm, One World Capital Group LLC, and its president, John Edward Walsh, 59, of Lake Forest. The firm specializes in foreign currency markets, allowing customers to conduct trading through specialized software.
The CFTC said that since Nov. 2, customers have reported that redemption requests exceeding $4 million have been denied. The agency, which regulates futures trading, also said One World has been unable to prove it has net capital of at least $1 million, the minimum required of foreign currency traders.
âIt is true that some customer redemptions have not been satisfied,â said Kevin Flynn, an attorney representing Walsh. Flynn said his client is committed to working with the CFTC to resolve any complaints.
The firm has about 1,500 customer accounts, he said, adding that he couldnât comment on its financial state.
The case is the third major complaint to be filed in recent months against Chicago-area trading firms. The CFTC and other agencies are investigating Sentinel Management Group Inc. and Lake Shore Asset Management Ltd. for alleged misappropriation of customer funds.
Walsh could not be reached. Records with the National Futures Association show that he started One World in 2005 after previous employment with several trading firms, including Rosenthal Collins Group LLC and Commerz Futures LLC.
The NFA also said he has been involved in three cases involving customer reparations, but details were unavailable.
Scott Williamson, deputy regional counsel for the CFTC, said the firm dealt mostly in the cash foreign exchange contract and phased out a business in futures contracts. He said Walsh may have improperly commingled customer funds with his own trading, or failed to hedge its risk.
So what happened to the money? Well sources are telling me that yesterday Charles Martin threw a big bash at the Chicago House of Blues that cost a fortune. Who is Charles Martin? Well he is the guy who applied with the NFA to become a principal of One World Capital but was turned down because:
http://www.nfa.futures.org/basicnet/Case.aspx?entityid=0273891&case=02REG00017&contrib=NFA
in 1997, in the Circuit Court of Cook County, Illinois, Martin pled guilty to the felony offense of possession of less than 15 grams of cocaine. The Notice of Intent charged that Martin's guilty plea to a felony offense disqualifies him from registration under Section 8a(3)(D) of the Commodity Exchange Act ("Act").
In addition, the Notice of Intent alleged that in 2000, also in Cook County, Illinois, Martin pled guilty to and was found guilty of the misdemeanor offense of theft. The Notice of Intent charged that Martin's guilty plea to and conviction of a misdemeanor offense involving theft disqualifies him from registration under Section 8a(3)(E)(iii) of the Act.
I love Martin's response to the NFA's decision to deny his principalship. He, "did not deny the allegations contained therin. However, he stated that he intended to show that his conditioned registration would not pose a risRk to the public."
Riiiiiiiiiiiiiight. Why didn't he just claim to have found Jesus? The NFA still rejected Martin in any case. But that didn't stop him from running the show at One World. The NFA says in its own complaint against One World earlier this year that "NFA received information that Martin was in charge of One World's entire operation and was acting as an undisclosed principal of the firm."
http://www.nfa.futures.org/basicnet/Case.aspx?entityid=0359973&case=07BCC00017&contrib=NFA
Last month One World "Agreed" to never allow Charles Martin to set foot in their office again in a settlement with the NFA. But looks like the damage has already been done. Within weeks of the NFA's decision the firm went bust. And Mr. Martin can be seen hoisting a Cold Frosty One at a downtown Chicago bar, laughing all the way to the bank...
CFTC Raids FXLQ
Forex Liquidity is apparently in debt to its customers to the tune of $11.6 million. Here is the official CFTC Press Release:
Forex Liquidity is apparently in debt to its customers to the tune of $11.6 million. Here is the official CFTC Press Release:
CFTC Sues Futures Commission Merchant Forex Liquidity LLC Alleging Undercapitalization in Excess of $11.6 Million
Washington, DC â The U.S. Commodity Futures Trading Commission (CFTC) announced today that on December 13, 2007, it sued Forex Liquidity LLC (Forex Liquidity), a registered Futures Commission Merchant (FCM) in Santa Ana, California, charging it with being undercapitalized in excess of $11.6 million and also with failing to maintain required books and records.
On December 14, 2007, the CFTC won an asset freeze and other emergency relief that will enable the Commission to freeze the remaining assets of Forex Liquidity and safeguard the interests of its customers.
According to the CFTC complaint, as of November 30, 2007, and perhaps earlier, Forex Liquidityâs net capitalization was below the minimum required by the Commission. As a Forex Dealer Member of the National Futures Association (NFA) offering to be the counterparty to retail customer foreign currency transactions, Forex Liquidity is required to have a minimum adjusted net capital of $1 million; instead, according to the complaint, as of December 7, 2007, it had an adjusted net capital deficit of approximately $11.6 million.
Forex Liquidity is also alleged to have been unable to produce required financial documentation regarding its assets and liabilities. For example, according to the CFTCâs complaint, Forex Liquidity represented in reports and discussions with NFA that its assets at one time included a $35 million ABN-AMRO bond located in Switzerland. The complaint further alleges that Forex Liquidity represented to the NFA that the ABN-AMRO bond (or its proceeds) were transferred to a U.S. registered broker dealer, Commonwealth Financial Network (CFN); however, CFN does not have an account for Forex Liquidity and the account number that the defendant provided to NFA was fictitious.
Accordingly, the CFTC also charged Forex Liquidity with failure to maintain books and records of its business transactions, specifically, current ledgers that accurately reflect its assets and liabilities.
In the ongoing action in the U.S. District Court for the Central District of California, the CFTC seeks an order of permanent injunction against the defendant, monetary penalties, and other relief. The Honorable Cormac J. Carney, U.S. District Judge, issued the restraining order freezing the assets of Forex Liquidity and prohibiting the defendant from destroying documents or denying CFTC staff access to books and records.