[forex scholar]

Having put myself in a good mood chuckling over the antics of Forward Forex I have decided to exhume some other FX broker dealer corpses, all for the benefit of the general trading public of course. The point? To emphasize why regulators are so concerned about firms that are undercapitalized.

The term "Maggot Mile" (http://www.forbes.com/forbes/1985/0520/038_print.html) refers to a stretch of land running from Boca Raton to Miami, Florida. Within these geographic boundaries lies one of the greatest concentrations of wealth in the world (held by American retirees.) And preying on these often naive denizens are thousands upon thousands of crooks, criminals, crackpots and con-men. Forex happens to be the financial instrument of choice at the moment for these petty thieves in suits. Back in the 1980's these same hucksters were peddling "oil lease scams" and in the 1990's during the big stock boom they peddled bogus internet stocks. The actual financial instrument being sold is of little consequence to these crooks out on the hustings since the instruments can be interchanged with whatever the latest marketplace fad happens to be. The main point is that regardless of whatever the huckster happens to be selling it is guaranteed to make the victim millions of dollars. It's the oldest sales pitch in the book.

Which brings us to our first slimy customer:Worldwide Commodity Corp in Ft. Lauderdale.
http://www.nfa.futures.org/BasicNet/Details.aspx?entityid=0291471

The owner of Worldwide was one Steven Labell. A quick look at Labell's resume should have sent the average investor screaming in terror. Labell has worked for one crooked operation after another. The firms Labell has been associated with showcase a rogue's gallery of compliance outlaws:
http://www.nfa.futures.org/BasicNet/Details.aspx?entityid=0189993&rn=Y

JCC INC (License Revoked in 1994 after massive commodities Fraud)
FSG International Inc (License forfeited in 2003 after being sanctioned for Fraud)
Financial Services Group Inc (License revoked in 1987 after massive commodities Fraud)
South Coast Commodities Inc (License revoked in 2007 after massive commodities Fraud)
Concorde Trading Group Inc (License revoked in 2002 after massive commodities Fraud)

While Labell was not guilty of every trespass at these firms clearly the apple didn't fall far from the tree in this instance. Nor, surprisingly, did it stop Worldwide from getting their license which they got on November 24, 2003. Fresh with a license what did Steven Labell do as a newly minted master of the universe? Why he went around selling Forex options promising would be suckers that they couldn't lose money betting on the war in Iraq… Add war profiteer to Labell's dubious list of lifetime accomplishments. By June of 2004 the CFTC had hauled Labell and his cronies into court to answer for the fact that over 200 customers had lost nearly $1.8 million betting away their life savings.
http://www.cftc.gov/opa/enf04/opa4944-04.htm

So what was the court’s verdict? “The order holds Labell and WWF (Worldwide Forex) jointly and severally liable to pay WWF's customers restitution in the following amounts: WWF $3.1 million and Labell $1.5 million. The order also imposes civil monetary penalties of $126,000 against Labell and $3.1 million against WWF. Finally, the order permanently prohibits defendants from engaging, directly or indirectly, in any commodity-related activity.”
http://www.cftc.gov/opa/enf07/opa5341-07.htm

End of story right? Not in the U.S. domestic retail forex industry where the shysters rise from the grave like the flesh eating zombies from 28 days later. Nope, what really makes this story juicy is the fact that refugees from Worldwide apparently migrated over to another firm, a dead forex firm walking, by the name of Nations Investments LLC. ($1,699,000 in net capital).
http://www.nfa.futures.org/BasicNet/Details.aspx?entityid=0358507&rn=Y

In fact, Nations even has the same address as did Worldwide!

1700 NW 64TH ST. SUITE 100
FT. LAUDERDALE, FL 33309

Anyone want to make odds on how long it will be before Nations gets shuttered? Perhaps the folks over at Intrade can add a dead forex firms expiration date contract to their prediction market. If so, I’m going long on Nations going under. And I ain’t worried about a margin call…