NFA Forex Dealer Dead Pool

[forex scholar]

David Smith is rumored to have over $1 billion in assets under management. As such he has money squirreled away all over the world. I Trade FX is just one of many brokers Smith has cash at. It is rumored that he has money at all the big FX brokers in the U.S. The folks over at investforlife.wordpress.com have been doing a great job covering the Olint story and today they printed an email from an anonymous source to Oanda asking them if they have any David Smith accounts and if so have they frozen them:
http://investforlife.wordpress.com/2008/07/10/olintoandatruth/

Naturally, Oanda cannot comment on private customer information. But they state in their email responses that regulators can request customer accounts be frozen. Smith is stating that is why he can’t give customers their money back. Olint customers are worried that Smith is playing the slippery eel and that he is using that as an excuse for non-payment.

My hunch is that regulators are swarming all over David Smith’s accounts right now and he most likely is telling the truth. But that being said will there be enough money in all his accounts to pay back his customers? That remains to be seen…

[forex scholar]

The new net capital numbers are out. Here is the link to access the report:
http://www.cftc.gov/stellent/groups/public/@financialdataforfcms/documents/file/fcmdata0508.pdf

The following firms have net capital below $10 million

Advanced Markets $5,017,000
Bacera $5,387,000
MG Financial $6,001,000
Forex Club $7,380,000
Hotspot $7,843,000
Friedberg Mercantile $8,167,000
CMC $8,426,000
Ikon $8,462,000
MB Trading $8,660,000
Easy Forex $8,662,000
IFX $9,141,000

In particular you will notice that three firms are far below the upcoming increase to $10 million. Advanced Markets, Bacera and Money Garden. In fact, they are struggling just to meet the current $5 million net capital requirement with Advanced Markets a scant $17,000 above the current law! That kind of capitalization does not inspire much confidence and traders really need to beware doing business with them.

The following firms have net capital below $20 million

GFS Forex $10,829,000
Alpari $11, 668,000
ODL $15,182,000
I Trade FX $15,828,000
FX Solutions $18,088,000
CMS Forex $19,306,000

The following firms have net capital above $20 million

PFG $20,275,000
Interbank FX $22,980,000
Gain Capital $44,293,000
GFT Forex $58,304,000
FXCM $70,794,000
Oanda $164,256,000

As always conduct your due diligence and make sure the firm you are trading with will be able to comply with the new law.

[forex scholar]

The situation at Olint is deteriorating rapidly as David Smith has shuttered a local office in Jamaica that he says was the subject of a bomb threat while his fund suffers an apparent bank run. In a grim letter to shareholders Olint states:
http://investforlife.wordpress.com/2008/07/14/olint-office-closed/

These negative and speculative press reports have put a strain on the management of the fund and the fund has come under more and more scrutiny which has also itself been triggered by the increased encashment demands. The reckless and prejudicial use of National Futures Association (NFA) report which was not against us but only mentioned us en passant, while not providing any evidence whatsoever but speculation, caused, as if by well timed design, further pressure on the fund.

Jamaican News is keeping up with the story and Radio Jamaica states:
http://www.radiojamaica.com/content/view/9930/26/

News of the worsening situation at OLINT comes two months after the company unveiled several changes to the way it does business with its clients which included restrictions on the frequency with which members can request payouts.

In addition, clients were told that they would face lengthy delays in getting back their funds.

David Smith is spinning hard but regardless, it appears that Olint is doomed. Again the question is will there be enough money to go around or was this a Ponzi scheme all along?

And if it was a Ponzi scheme did I Trade FX, where David Smith was once a leading principal, knowingly or unknowingly help facilitate it?

To their credit, I Trade FX has been desperately trying to shake this guy like a bad cold. But as Winston Churchill once said of Italy’s disastrous alliance with Germany during World War II, “How much easier is to join bad companions, than to shake them off…”

[forex scholar]

And we’re not going to take this anymore! So sayeth the investors of Olint who are pouring onto the Internet in Jamaica to rage against David Smith’s Machine. Here is just a sampling: OLINT Local Offices Closed Real Investments For Life

Have you heard of people phoning-in bomb threats to an airport in order to delay their own flights (because they don’t want to miss their plane)? Same thing here, DS knew there would be a massive crowd at his local office today and phone-in the bomb threat!

it is now obvious that OLINT is a ponzi scheme. all this due diligence sh*t has been a farse from day one as when u look at the response from OANDA to the club (whoops PONZI) member it is obvious that he has lost or stolen our money. he must be sue and if necessary sent to jail. i would however he be free and pay us something if possible. LOL NEVER TRUST ANYONE WHO ASKS U TO PRAY FOR A SOLUTION aka Nationwide Interview. DAVID SMITH is a fraud and a spineless *****. Come clean if u are a man

David though u r a honest person you have made drastic errors in regards to the management of Olint. Though i know that u are honest u have caused great pains to club members bucause of your incompetence in management. You should have stick to trading alone and leave the management to person who could do the job. I know we will get paid but i think u deserve 12 lashes

Come clean Mr. Smith. stop propagating rumors, stop passing blame. plain and simple…. STOP THE LIES!

David Smith it seems that your reputation is important to you. Well sir, you no longer have anything going for you. This last email has broken the camels back. Again you speak without saying anything. YOU ARE FINISHED. Pay the people them what you can, and move on. There are people who will still give you money to trade for them in the future. MOVE ON MAN.

That about sums it up. Pay the people and move on man (of course when you say “man” be sure to pronounce man with the proper Jamaican accent.) This is yet another lesson on what can happen to you when you give your money to someone who ain’t got no license man.

[forex scholar]

Browsing the web I came across this article on a very unique marketing ploy that I Trade FX was using to attract clients in Jamaica last November:
David Smith’s Olint partners with iTradeFX in a US$100 giveaway to Jamaicans | Silicon Caribe

Jamaica- David Smith, the Fx Chief of Jamaica, founder of OLINT the premier foreign exchange trading investment club has lent his name to iTrade online forex trading platform with this giveaway. The fullpage, full colour newspaper advertisement and the website says: David Smith is adding US$100 of his own money to Live Forex Trading Accounts for Jamaican Residents who open with iTradeFX between November 15th and December 31st this year at gotradejamaica.com. Of course MTI Traders is all over this, they have been the dominant forex trading educator brand in Jamaica. They have from day one marketed themselves as the company that taught David Smith what he knows. So this giveaway should not be suprising.

Purely, what a powerful affiliate marketing programme !Whoever thought this up, is very intuned with the psyche of the jamaican people has a great timing, it’s very Digicel-esque this offering. The question that’s been hounding me though is this, are Jamaicans really interested in learninig to trade forex themselves or do they simply want to understand how it works, so as to legitimise, fortify their decision to become investors in forex trading investment clubs. I’m sure that for every 100 people Market Traders Institute (MTI) trains in their programme, less than 10% actually become forex traders and do so consistently.

David Smith was depositing $100 of his own money into individual I Trade FX accounts? This is highly irregular to say the least and while I have heard of plenty of companies that give signup bonuses to customers I have not heard of individuals doing this for customers.

What it indicates is that Smith was not some passive, minority shareholder in I Trade FX. It sounds like he was pretty involved in the firm judging from this promotion.

[forex scholar]

Congratulations to the customers of FXLQ who are on the verge of being made whole, an unusually rare occurrence when a forex dealer goes bankrupt. Here is hoping some of that luck rubs off on the poor sods at Olint.

But the customers of FXLQ won’t have Rob Gray to thank, that’s for sure. At the last second Gray tried to scuttle the Receiver’s plan to have GFT and Ikon buy the customers of this formerly disgraced and dismembered firm.

Gray said “NYET!” to the sale in a formal court objection (someone please explain how Gray is able to strut around in public, and before a court no less, after faking a $35 million bond?)

The Receiver then proceeded to obliterate Gray in court in a rollicking motion filled with such goodies as this: http://www.robbevans.com/pdf/forexlqreplyreceiver01.pdf

In this case, the hearing on the Receiver’s Motion is scheduled for July 14, 2008, and thus, Gray’s Objections should have been filed on or before June 30, 2008. In utter disregard of the Local Rules, Gray waited until 6:11 p.m. on July 3, 2008, to file his Objections and supporting documentation, which totaled approximately 341 pages.

“Utter disregard” for the rules? That’s our Robbie boy!

Throughout Gray’s Objections there is an underlying theme that Gray is “offering” to turn over to the receivership estate the sum of $3,000,000 so that all the creditors’ claims can be paid in full…

The Receiver views Gray’s “offer” as nothing more than a hallow promise, as Gray is already duty bound to return these funds to the receivership estate. As is highlighted in the Receiver’s first and second reports previously filed with the Court, the Receiver believes that Gray has misappropriated between $8,000,000 to $11,000,000 of FXLQ funds…

So where is this mythological $3 million being kept hidden? You don’t happen to have a safe house in the Turks & Caicos do you Robbie boy?

Finally, Gray also objects to the Receiver’s proposed sale of the FXLQ office equipment, furniture and fixtures, under the theory that there is no reason to sell such equipment. On the contrary, the Receiver can think of no reason to keep the equipment, fixtures and inventory, as the FXLQ offices are vacant, the business operations of FXLQ have been terminated with no future prospects of an on-going operation…

Ouch. It is finally hitting Robbie boy that FXLQ is DONE. Finished. Kaput. Bereft of life it rests in peace. But he can’t let go. One can picture him clinging to the fax machine as a couple surly movers try to haul it out of the office.

But my favorite little nugget has to be this statement found in Ikon’s motion to the court:
http://www.robbevans.com/pdf/forexlqreplyikonglblmkt01.pdf

Mr. Gray never allows the facts to get in the way of a good story.

Mr. Gray proposed to immediately distribute the funds in the customer accounts through IFX Markets Inc. However, as established in the Affidavit of Paul Belogour, attached hereto as Exhibit A, no agreement between Mr. Gray and IFX Markets Inc. to distribute the funds exists.

Taking a quick look at the IFX affidavit Mr. Belogour says:

On July 3, 2008 I had a telephone conversation with Robert Gray of Forex Liquidity. The conversation was brief. Mr. Gray initiated the call and asked me if IFX Markets was interested in the assets of Forex Liquidity. I informed Mr. Gray that IFX Markets would be interested in such a transaction and would request more detailed information if it decided to proceed. I spoke with Robert Gray via telephone again on July 7, 2008 to discuss additional information. On July 9, 2008 I formally informed Robert Gray via email that IFX Markets was not interested in purchasing the assets of Forex Liquidity.

Yet there Robbie boy was telling the court on July 3rd, only a few hours after getting a vague “sure we’re interested” shrug of the shoulders from IFX , that IFX markets could be used to distribute customer funds.

Classic Gray. Just keeps on Bullsh*tting them to the end. And it certainly is the end. Oh Robbie boy the pipes, the pipes, are calling…

[forex scholar]

Yesterday the Turks and Caicos Government froze the assets of David Smith and raided his home and place of business. Armed with a search warrant from the Supreme Court the Financial Crimes Unit of the Government swooped into action, grabbing computers, files and other knick knacks as their investigation of him reaches an apparent climax. Radio Jamaica is reporting that in the end Smith could face criminal charges: http://www.radiojamaica.com/content/view/10004/26/

Worries are growing that the collapse of Olint could have repercussions across Jamaica as the investment scheme is said to have $600 million of Jamaican money tied up in it. Good Grief. Now we are at the point where forex hucksters can crash a nation’s entire economy?

Invest for Life has the full story: http://investforlife.wordpress.com/2008/07/15/olint-assets-frozen/

On a Separate Note: Sources are telling me that the I Trade FX “David Smith $100 Bonus” promotion last winter lasted only a few days before it got shelved. I Trade FX should be releasing their official response to the NFA complaint in the next few weeks.

Stay Tuned…

[forex scholar]

“I am now indemnifying all the directors and employees as I am the only one that was aware of these activities and I am now at this stage unable to pay out and am making this proposal to you.” – David Smith, per Nationwide News.

It sure is beginning to look like Olint was a Ponzi scheme. A news report is stating that David Smith admitted the following in a leaked email obtained by Nationwide News: http://boomp3.com/listen/1741m06o4_f/olint-broke-provider-investforlife

• The club is broke and most likely bankrupt
• The older investors got their money out while the newer investors are the ones “carrying the losses.” Is that not the very definition of a Ponzi scheme?
• He overstated his rates of return to club members.
• The collapse of the fund was due to; competition from competitors, regulatory scrutiny, shoddy bookkeeping.
• In particular Smith is blaming the Jamaican Government for raiding his company in 2006 as that loss of his records apparently precipitated an accounting fiasco resulting in “double payments” to some members. He then states that he didn’t report these “double payments” to his customers because he was afraid of a bank run which he once again blamed the Jamaican Government for starting.
• Smith was only trading 50% of the funds while accounting for 100%.
• He closes stating that Olint was “not a Ponzi scheme” and to give him another year to make it all back.

But no sooner had this report been read over the airwaves than David Smith himself called in screaming that he never wrote the email and that it was bogus. Smith said, “I had not written the email. It’s absolutely not true. And if you really think about it do you think my house is that big that I had to email my own wife?”

So who is to be believed? Well, with David Smith’s credibility in tatters my gut tells me the email is legit. But who knows for certain. What is certain is that Olint is El Busto.

Still, no word of any arrests in the Turks and Caicos. The investigation goes on and there will certainly be more to come.

[forex scholar]

So says this article from the Jamaica Gleaner in December of 2007. As part of the $100 promotion that I Trade FX was offering to Jamaican customers via www.gotradejamaica.com Smith is said to have “created the platform” that customers were using in this promotion, which was in fact I Trade FX’s own platform:
http://www.jamaica-gleaner.com/gleaner/20071207/business/business5.html

The i-Trade FX platform is accessible at GoTradeJamaica.com. The company, which is registered in Florida, describes itself as 'a market maker in the forex market.'

Smith created the platform, the Financial Gleaner was advised, to allow Jamaicans to test for themselves how trading is done and to demystify the element of how such lucrative returns are possible.

The article further states:

David Smith, principal in foreign exchange trading company Olint Corporation, is offering a platform to Jamaicans wishing to learn how to trade currency online.

Smith has offered to each person signing up to i-Trade FX, "$100 of his own money" to help kick-start live foreign exchange accounts, a press advertisement blared Wednesday.

However, each trader signing on to test their mettle must also put up $300 - essentially creating a margin account - and must sign up by December 31 to get the extra $100.
The would-be traders would be required to do a minimum of 10 'round-turn' trades per $100 deposited to their accounts, the ad said.

A round-turn trade essentially requires the trader to execute both a purchase and a sale transaction, or vice versa.

"Clients who request a withdrawal of all account funds without meeting the aforementioned requirement," the ad said, "may not withdraw the deposit giveaway amount."

The more I read about David Smith the more I see the name of I Trade FX popping up. And the more suspicious it looks for I trade…

[forex scholar]

It’s hard to know what to believe about Olint these days with newspaper headlines like this “David Smith Alive and Kicking” courtesy of the Jamaica Observer:
http://www.jamaicaobserver.com/news/html/20080723T020000-0500_138189_OBS__DAVID_SMITH_ALIVE_AND_KICKING_.as p

POLICE in the Turks and Caicos Islands yesterday dismissed rumours that head of beleaguered investment club Olint, David Smith, had attempted to commit suicide by taking a drug overdose.

"He is alive and kicking as far as I know," Sergeant Calvin Chase of the Turks and Caicos police force told the Observer. "We have no such information and I am certainly not aware of it."

So where did these “rumours” come from? Who knows. So much about this Olint case is cloaked in secrecy. An email is leaked by an unknown source purportedly written by Smith stating the fund is a shambles forcing Smith to deny it. But later in the week Smith’s own lawyer hints that the email was in fact legit:
http://investforlife.wordpress.com/2008/07/18/olint-broke-email-very-genuine/

Earlier this week Jamaican radio reported that Olint’s accounts at brokers like FXCM, Oanda and FX Solutions have been frozen and that David Smith is being investigated by the Department of Justice for possible money laundering (although none of these firms has gone on the record stating they even have any David Smith accounts at their firms, possibly because of client confidentiality agreements.)

And Government officials in the Turks and Caicos remain tight lipped and unwilling to shed any light on David Smith’s now defunct operation. In such an environment “rumours” will take hold. It is time someone in authority in Jamaica or the Turks and Caicos step forward and tell us all what the hell is going on.