Upon second glance at the latest CFTC Capital Report I have come across a rather alarming capital number for a firm that previously have been well above the $5 million minimum capital requirement. The firm is ODL securities and they reported only $2,566,000 in adjusted net capital. The previous month they reported over $9 million in adjusted net capital. That is quite a stunning drop.
But what makes ODL's current number even more disturbing is that in October the NFA gave ODL a beat down in a BCC action in which they charged ODL with a bucket load of financial requirement violations that seriously calls into question the manner in which this firm is run.
NFA Charges:
• F.R.SEC11(a)NEW - FDM MAINTAIN ADJUSTED NET CAPITAL
•F.R.SEC11(b)NEW - FDM TAKE CONCENTRATION CHARGE-UNAFFILIATED
• F.R.SEC11(c)NEW - FDM TAKE CONCENTRATION CHARGE-AFFILIATES
• F.R.Section 11 - LTM REPORTING
• C.R.2-10 - RECORDKEEPING FCMS/IBS
• C.R.2-36(b)(1) - CHEAT, DEFRAUD, DECEIVE FOREX CUSTOMERS
The NFA gives example after example of how this firm misreported its financial numbers and failed to meet the most basic financial regulatory requirements expected of a Forex Dealer.
http://www.nfa.futures.org/BasicNet/Case.aspx?entityid=0330396&case=07BCC00006&contrib =NFA
Quote:
During the examination NFA discovered that ODL had failed to prepare an accurate net capital computation as of March 31, 2006. ODL had improperly classified cash held at a Cayman Island bank as a current asset when it should have been classified as a non-current asset, failed to properly account for customer debits, netted customer debits against other credits in non-related customer accounts, and failed to the appropriate haircut charge on money market funds held at a brokerage firm. As a result, ODL overstated its net capital by approximately $448,000.
ODL failed to take the applicable concentration charge on transactions with both unaffiliated and affiliated counterparties. This failure resulted in an overstatement of ODL's net capital by approximately $1.3 million on March 31, 2006 net capital computation.
As a result of adjustments to ODL's capital computation resulting from the violations referenced above ODL failed to maintain the required minimum adjusted net capital as of March 31, 2006.
NFA's review of ODL's financial statements during the examination revealed that ODL had also failed to maintain the required minimum adjusted net capital as of April 30, 2006.
Subsequent to NFA's examination, ODL has consistently failed to maintain the required minimum adjusted net capital. Specifically, ODL's adjusted net capital fell under the required minimum on May 31, 2006, August 25, 2006, September 30, 2006, November 10, 2006, November 17, 2006, November 30, 2006, December 1, 2006, December 22, 2006, and January 19, 2007.
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The NFA's final decision was as follows:
Quote:
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ODL and King were ordered to be jointly and severally liable for payment of a $165,000 fine. Dubuque was ordered to pay a $3,000 fine. In addition, Dubuque was ordered to tape record, for one year, all conversations between himself and existing or potential customers; retain the tapes for one year from the date they are created; and make the tapes available to NFA upon request.
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With ODL's net capital woefully below $5 million and in light of the NFA blowing the lid off ODL's appallingly bad book keeping and shoddy accounting practices I am putting out the warning to the trading public: Avoid ODL and if you have money at ODL it's time to get your money back and find yourself another broker.