NFA Forex Dealer Dead Pool

[forex scholar]

There is a great deal of uncertainty in the Swiss Forex Dealer community right now. There is no way of knowing which firms are here to stay and which firms are collecting coins in preparation for their crossing of the river Styx. I have emailed all the major Swiss firms to try and find out if each firm plans on getting a banking license. The responses (or lack thereof) have been quite illuminating.

As such I'm starting a Swiss Dealer Dead Pool to keep the trading public updated and informed about what is going on in Switzerland.

Firms that claim they are applying for a banking license
1) ACM
2) Fibo Group
3) Crown Forex
4) DukasCopy
5) MIGfx

Firms that are fleeing Swiss Regulation
1) Masterforex. Their business office is listed in Switzerland but they are registered in the Seychelles and have stated they do not need to get a banking license.
2) forex-swiss. FXCH, despite the fact they are NAMED "Forex Swiss" claim registration in Dominica. This is an odd company that has claimed multiple office addresses over the years including, Switzerland, Austria, South Africa, Iran, and the United States. Today they are claiming they have offices in Dominica and the United Kingdom. Tomorrow who knows, they could claim a mailing address in Tibet. Beware this firm.
3) Prime4X. Their head office is in Switzerland but they have stated they are applying for a license in Cyprus.

Firms that are no longer accepting customers or have been shutdown
1) WestCapFX
2) Tradex Swiss AG
3) Finex
4) Aleccohfx

Firms that refuse to comment
1) GFX Group (Forex.CH)
2) Swiss Direkt
3) Tadawulfx
4) Advised Trading

As always conduct your due diligence and make sure the firm you trade with is regulated and legit.

[forex scholar]

After getting a series of tips from disgruntled traders I'm going to follow up on a couple unregulated forex brokers next week dabbling in the treacherous MT4 arena. Masterforex, PoltekFX and FX Open are involved in a brutal slugfest that has spilled over into numerous bulletin boards. Who are these firms and what are they up to? Details to follow next week.

[forex scholar]

What happens when a business deal goes bad? You get bitterness, recriminations, machinations and vows to get even. This appears to be what happened after Poltek FX and FX Open parted company. It was not an amicable divorce and after reading through dozens of threads it appears the two former spouses are still hurling dishes, pots and pans, as well as the kitchen sink and family cat at one another in a fit of rage that even Hillary and Obama can’t match.
Poltekfx - Forex Trading

In this saga there are no good guys or bad guys. All the Savior can do is warn people to stay on the sidelines and watch the spectacle from afar, well out of harm’s way. But if you are looking for a scorecard, well, you’ve come to the right place. Let’s pick things up from one of the earliest threads on the subject.

“FX Open Scam Scum.” This is the title of a series of truly head spinning threads over at Forex Factory detailing the misadventures of FX Open, a forex dealer with one of the worst reputations in the business.

FXOPEN SCAM SCUM
Fxopen Is a SCAM, Be Aware!
FXOpen Scam Alert again...
Fxopen Are Scammer ................................... ..

Now if you ask FX Open they blame their poor reputation on the scoundrels at Poltek FX who they claim have been waging a systematic propaganda campaign designed to discredit their firm.
FXOpen forex broker - forex services - forex trading

But who is FX Open? Well, nobody really knows. There is no business address listed on their website. There is no Board of Directors or head shots of executive officers. If you really press them they’ll give you an address in Egypt or tell you that they are registered in the Seychelles. And if that isn’t confusing enough one muckraking trader found out that their website is registered in Florida to a “Mr. John Fool.”
Forex Factory - View Single Post - Fxopen Is a SCAM, Be Aware!

So they could be anywhere and everywhere. They could be someone or no one. In short, they can up and vanish like a fart in the wind if they have to.

FX Open is also one of the too numerous to count unregulated MT4 brokers preying upon the desperation of those traders who have fallen in love with MetaQuotes’ software. And like so many of these unregulated forex brokers they are in the habit of misleading the public about their unregulated status. When a customer asked them if they were regulated this was their response:
Forex Trading - View Single Post - FxOpen

FXOpen is offshore broker and FXOpen's business activity is regulated by SIBA.
FXOpen - Certificate of Incorporation

Now let’s go to the SIBA website and find out just what this means. The following are the key features of the law that supposedly “regulates” FX Open:
HOME OF INTERNATIONAL BUSINESS OPPORTUNITIES

• No requirement to disclose the beneficial owners of an IBC
• No minimum capital stipulation
• No need to file accounts with the Registrar

In short, FX Open’s “regulation” consists of a useless piece of paper that probably cost them a $100 in filing fees. They are no more regulated than is some ten year old kid’s lemonade stand.

That alone should convince traders to STAY AWAY from them. But the truth is that’s just the tip of the iceberg with these guys.

FX Open has made a lot of enemies in their brief history. One of them is a Kazakhstan native who goes by the name of Erlan. Erlan was a former customer of FX Open’s and he setup a website completely devoted to getting back $50,000 that he claims FX Open stole from him: FXOpen.com is a scam company! Beware!

FX Open then responded to Erlan with a website of their own (FXOpen public letter) telling a wild story that included accusations that Erlan was sending all of FX Open’s customers “penis enlargement” emails, was trying to crash FX Open’s server and hack FX Open’s customer files and was actually the customer of a former business partner of FX Open’s (Poltek FX) based in Russia that was using Erlan to get back at FX Open. (More on Erlan and his shenanigans in Part II of Metatrader Misery.)
Forex Factory - View Single Post - Fxopen Is a SCAM, Be Aware!

Now seriously, who in their right mind is going to open an account with FX Open after hearing such a loopy tale? And it gets even zanier. Someone claiming to be FX Open’s CEO starts posting at Forex Factory demanding that the forum moderator stop banning supporters of FX Open or else they’ll sue Forex Factory.
Forex Factory - View Single Post - Fxopen Is a SCAM, Be Aware!

The moderator replies that FX Open is a scam and the man claiming to be FX Open’s CEO quickly slinks out the back door after he sees his threats are being ignored. Indeed, FX Open gets completely banned from the forum and is forced to waddle over to Forex TSD where they cause another huge fight with traders screaming that FX Open is a scam and should be banned.

Is FX Open a scam? It’s just not clear. FX Open’s lack of transparency is deeply troubling. Their communication with the public is so unprofessional and their English so mangled that one gets the impression that Borat is running the company. They are also as I have stated before unregulated so if they ever get into trouble they are accountable to no one. At the end of the day this is what the trading public should be most concerned about.

The public should also be concerned about the firm’s alleged dealing practices. The number one complaint against FX Open is that they are a ruthless market maker that has no patience for customers who actually make money. Now this is a common complaint against many market makers. But in the threads referenced above I’ve never seen so many traders screaming about a firm’s dealing practices. Trader after trader complains about profits being removed from their accounts. Numerous traders complain of how the firm booted them out only after they made profits. Traders complain about terrible execution in numbers that really call into question the dealing ethics of this firm.

FX Open’s reply is that all these complaining customers are using some kind of secret software that allows them to “cheat” and make big profits off them. Thus they have no choice but to close the accounts of these cheating customers. I’m aware that there are some traders out there who are skilled at jumping in and out of the market in short bursts due to price discrepancies and latency issues. But this is very difficult to do. Yet judging from FX Open’s claims you would think that there are hordes of these traders out there raping and pillaging poor little forex dealers like FX Open.

Having said all that are some of these complaints against FX Open being orchestrated by their enemies? It appears so. And in part II of Metatrader Misery we’ll take a look at FX Open’s rival “Poltek FX” to uncover what these guys are up to.

[forex scholar]

Metatrader Misery- Part II
Is Erlan Saduakasov a real person? Well, judging from this You Tube video he is.
YouTube - Erlan Saduakasov speaking himself

Erlan has been waging a non-stop crusade against FX Open for several months now. He appears on bulletin boards, has his own website (FXOpen.com is a scam company! Beware!) and appears to be quite convincing. Did Erlan lose money at FX Open? Probably. Is Erlan working for or working with FX Open’s hated rival Poltek FX? It sure looks that way.

The evidence is a thread at ForexTSD in which Erlan’s IP address gets traced back to one of Poltek FX’s offices in St. Petersburg, Russia.
Brokers Scam - Page 5 - Forex Trading

The office Erlan was traced back to was FXIndia.org, which is one of the many front groups Poltek uses to recruit customers. Other ones include “Master Forex” (yup, that’s the Swiss outfit that said it doesn’t need to get a banking license and you’ll know why in a moment), Beaverhead Financial, Iberia Forex, and others.

Poltek’s official business address is listed in Belize and like FX Open they too have a useless fill in the blank “certificate” which can be flashed in the faces of naïve traders whenever pesky questions about “regulation” come up:
http://www.poltekfx.com/pic/sertificat.jpg

Another note about Poltek’s address is that their other company, MasterForex, claims an address in Switzerland. Yet it appears this address is fictitious. When a poster at a bulletin board stated they couldn’t actually find Masterforex’s office and asked them if this office even existed a Masterforex’s spokesman refused to provide any additional information and just stated “we also have an office in Russia where you can meet us.” You’d have to be a pretty brave person to want to visit this Russian office knowing the Swiss office actually listed on their website is bogus.
RECOMMENDED BROKER - Masterforex - masterforex.org - Page 12 - CariGold Forum

As for Master Forex’s regulatory status, you guessed it; Master Forex has its own certificate from the Seychelles it likes to use to ward off those evil regulatory spirits: http://www.masterforex.org/upload/image/fullsize/13.jpg

Why so many different registrations and addresses? Well I guess it never hurts to have a second getaway vehicle in case the first one breaks down. And just as with FX Open you won’t find the actual names of any CEO’s or executive officers on any of these websites. Just addresses for P.O. boxes or links to instant messenger addresses. I’m stunned that anyone would actually consider sending their money to such financial phantoms who can conjure themselves up on a moment’s notice and then disappear without leaving a trace.

Of course, Poltek knows their lack of credibility is a problem which is why they dangle all sorts of goodies before the trading public’s eyes in an attempt to make sure traders don’t look behind the curtain. They offer pip rebates, insane 500:1 leverage, trading volume bonuses, deposit bonuses and even have a special bonus for traders who drive up traffic on their forums by posting sycophantic rubbish.
Poltek FX - Bonus Money

So even though Poltek has no credibility they are able to woo newbies who are looking for a bargain. But the competition for these newbies is fierce which is why Poltek and FX Open are at each other’s throats.
This Russian version of the Hatfields and the McCoys is likely to continue well into the future with both screeching at each other in the comical form of broken English as seen below in this Poltek broadside against FX Open:
Forex Trading - View Single Post - Poltekfx

One of these days we have released a newsletter to all our customers, stating that Poltek Fx. starts operating since the 10th of January. Right after that FxOpen Scam Company has published a piece of news about the so-called "phishing emails". You can read it here (FXOpen forex broker - forex services - forex trading).

We are more than suprised with such reaction and would like to state the following:

When you opened your accounts, you did it at Poltek Company, because at that time Poltek used to cooperate with FxOpen. FxOpen is operated by two persons, has no real office, or location and is well known over the web for scamming their customers. You can read about it at [url=http://fxopen.info]
This is the reasin why we don't work with them any more.

After that the head of FxOpen has stolen the whole customer database (including funds and orders) from Poltek and opened his own so-called "brokerage" Belveder. This case was reported to Metaquotes Inc, and their Metatader license is under question now.One case of deceptions (among great many of them) of clients is here: FXOpen.com is a scam company! Beware!

Fxopen itself try to hide these facts.

Besides, the PR director of FxOpen, seems to know English poorly (he is actually a young man from one of the former Soviet Republics), and doesn't know what a "phishing email" actually is. Let us forgive the under-educated boy, but in fact a phishing email always tries to receive some data from you. Logins, passwords, etc. WE ARE IN NO WAY TRY TO RECEIVE ANY INFORMATION FROM YOU. This newsletter is intented only to let our customers know that the company, where they have their trading accounts has started to operate again with even better level of services.

I love how Poltek, with its busted English and awful grammar, has the nerve to ridicule FX Open’s poor language skills. I don’t think that is the best strategery Poltek should be using against FX Open. In any case FX Open claims Poltek stole their clients and Poltek claims FX Open stole its clients… This tit for tat pretty much summarizes the poor state of affairs these two firms find themselves in today.

So to those MT4 traders who are constantly on the move like Bedouin tribesmen in search of a broker, be sure not to pitch your tents with either of these two dealers. Bedouins are supposed to be adept at spotting mirages, and FX Open and Poltek FX are merely mirages of legitimate forex dealers.

[forex scholar]

It has not been a good year for Interbank FX. First FXLQ goes down resulting in the firm losing a key liquidity provider. Then FXLQ goes into receivership taking $10 million of IBFX's net capital with it. Now IBFX has just announced to the public that there was a major security breach and that customers who had applied for an account prior to April 2, 2007, had their personal information exposed on a rogue server accessible to anyone on the internet.
http://doj.nh.gov/consumer/pdf/interbank.pdf

To IBFX's credit they appear to have taken immediate steps to secure the information and are offering those customers who were potentially exposed free membership to a credit monitoring company. I'm not familiar with Corporate Law but it appears IBFX hired Kirkland & Ellis to contact State Attorneys General about this? Pretty Intensive damage control by the folks at Interbank.

But considering the news has broken all over the net well outside the forex community best to cover all bases I guess:
interbankfx security breach - Google Search

Let's hope Robert Gray hasn't been lurking around this rogue server all this time...

[forex scholar]

Fransesc Riverola is doing a top notch job at FX Street keeping traders up to date about the latest regulatory changes in Switzerland. He has sent out questionnaires to the Swim FX Broker community and several have responded, most recently Crown Forex who has stated they are applying for a banking license.
http://weblog.fxstreet.com/2008/04/open-letter-t-1.html

Crown Forex’s CEO was quoted as saying:

investors must be very careful when dealing with Swiss brokers that do not see the high importance of applying for a bank license. It is important to keep in mind that many small brokers will not be able to apply or even comply with the new regulations due to the huge financial requirements this type of license incurs.

BINGO. He is dead on. This is why I started the Swiss Dealer Dead Pool. The gig is up for the schlock shops in Switzerland. Either get a banking license or in the words of Der Terminator “GET OUT!” Firms will need to have a minimum $9 million in firm capital and meet a whole variety of accounting requirements in order to get a banking license.

The CEO of Crown Forex closed his remarks by saying:

As a result in the regulatory ordinances in Switzerland, very few Swiss brokers will remain in the game, if I may say so, by the end of 2009. Probably only 5 or 6 brokers will survive out of all the brokers, whether medium or small.

Here an updated Dead Pool for the trading public.

Firms that claim they are applying for a banking license
1) ACM
2) Fibo Group
3) Crown Forex
4) DukasCopy
5) MIGfx
6) GFX Group (forex.ch)

Firms that are fleeing Swiss Regulation
1) Masterforex. Their business office is listed in Switzerland but they are registered in the Seychelles and have stated they do not need to get a banking license.
2) forex-swiss. FXCH, despite the fact they are NAMED "Forex Swiss" claim registration in Dominica. This is an odd company that has claimed multiple office addresses over the years including, Switzerland, Austria, South Africa, Iran, and the United States. Today they are claiming they have offices in Dominica and the United Kingdom. Tomorrow who knows, they could claim a mailing address in Tibet. Beware this firm.
3) Prime4X. Their head office is in Switzerland but they have stated they are applying for a license in Cyprus.

Firms that are no longer accepting customers or have been shutdown
1) WestCapFX
2) Tradex Swiss AG
3) Finex
4) Aleccohfx

Firms that refuse to comment
1) Swiss Direkt
2) Tadawulfx
3) Advised Trading

As always conduct your due diligence and make sure the firm you trade with is regulated and legit.

[goose]

Hello forex scholar,

Is WestcapFX run by the same people at NorthFinance. I believe it is a Russian group. However, I am not all to sure.

Thanks for your work and input.

[forex scholar]

Originally Posted by goose

Hello forex scholar,

Is WestcapFX run by the same people at NorthFinance. I believe it is a Russian group. However, I am not all to sure.

Thanks for your work and input.

I'll see what I can find Goose

[forex scholar]

With all these bogus claims from small time brokers claiming they are regulated because they hold a “certificate” they managed to pull out of a cereal box it is hard to know what to believe these days when a firm states they are “licensed.”

And perhaps no firm straddles the line between licensed and unregulated more than a firm by the name of GCI Financial. A reader asked me to provide some background on GCI recently and after doing a quick Internet search I found myself once again swimming in the deepest, darkest, murkiest depths of the Forex Ocean in search of that most dangerous dorsal finned predator of all- the offshore FX boiler-room.

GCI appears to have been started back in the 1990’s and used to be a U.S. based company with its CEO, Mitch Vasquez, living in Wilton, CT. It didn’t take too many clicks of the mouse to discover that GCI had been busted by the CFTC under the headline “CFTC CRACKS DOWN ON FOREIGN CURRENCY SCAMS NATIONWIDE.”
http://www.cftc.gov/opa/enf02/opa4611-02.htm

The complaint itself charged GCI for violating the Commodity Exchange Act. In short, the CFTC was taking GCI to court because they had not registered with the NFA (Hello FXDD! This could someday happen to you!)
http://www.cftc.gov/files/enf/02orders/enfgci-order.pdf

Also cited in this lawsuit was Vazquez. In 2002, Vazquez and GCI settled the suit and as part of the settlement Vazquez paid a $100,000 fine and agreed to

“for a period of three years, not to act in any capacity or affiliate in any way with any individual or entity which involves the solicitation, acceptance of orders, transmissions of orders, execution, advice related to, pooling of funds, or recommendation for or of futures contracts, options on futures contracts, or options on foreign currency either (i) for or on behalf of any U.S. citizen or U.S. resident, regardless of where cleared or conducted; or (ii) that are cleared or conducted in the U.S., whether on or off-exchange, regardless of the citizenship or residency of the parties.

Sounds pretty clear to me. Basically, Vazquez and GCI were expected to close their doors and get out of the FX business.

But apparently GCI didn’t see it that way. Instead, they submerged beneath the water and headed to Belize. Well at least their “State of the Art” dealing room fled to Belize. But Vazquez doesn’t appear to have gone anywhere as a FEC filing showed he contributed $2000 to George Bush’s Presidential Campaign in 2004 where he listed an address in New Canaan, CT.
http://fundrace.huffingtonpost.com/neighbors.php?type=name&lname=VAZQUEZ&fname=MITCHE LL

Meanwhile in Switzerland (cue up Jaws music)…

According to the gossip on the bulletin boards Vazquez had apparently branched out into the notorious Swiss Market. Rumor has it that GCI and GFX (Forex.CH) are the same firm. This was news to me. But several people have stated that Vazquez is also a director at GFX and also points out that the websites of GCI and GFX are remarkably similar and also housed on the same servers?
http://www.elitetrader.com/vb/showthread.php?perpage=40&pagenumber=1&threadid=76 386
http://www.forexfactory.com/showthread.php?t=7884
http://www.forexpeacearmy.com/public/review/www.gfxsa.com?page=0&perpage=10

Also, it appears that GFX has recently gotten into some trouble with the Swiss Government according to one trader who cited this (translation welcome if anyone speaks Francais):
http://rc.geneve.ch/rc/consultation/consultationcomplete.asp?no_dossier_fed=CH-660-1425005-9

As for GCI, it claims registration in Belize and you can actually verify they are in fact licensed by the regulatory authorities there:
http://www.ifsc.gov.bz/licensed_provider.html#f

Strangely, GCI doesn’t provide this link on their website which would allow traders to verify this independently which I just did as the Savior is nothing if not fair and balanced.

The reason GCI may be quiet about their regulatory status with Belize officials is because the IFSC does not actually do much aside from collect fees and provide “guidelines” to businesses. In fact, they state on their own website:
http://www.ifsc.gov.bz/about.html

“The Commission relies on self-regulation, meaning that while government sets overall standards, it expects much of the actual work in terms of monitoring and compliance to be done by the industry itself.”

Bwahahaha! As if a forex firm that has been driven out of the United States for being a “scam” is going to properly “self-regulate” itself. This tells you about all you need to know about the quality of Belize regulation.

So what should traders take from all this? Common sense would dictate that traders avoid GCI. Their compliance history is poor and their current regulators in Belize clearly don’t give a damn what they do so long as they pay their bills on time. At the end of the day GCI is just another shark in the water. Here’s hoping someone harpoons them and sends them to the bottom of the ocean from whence they can never be dredged up again.

[forex scholar]

This is going to be a post rife with Texas sized clichés. How can it not be with a company with a name like “eToro” that has a logo with a pair of bull horns jutting out of it?

First of all who are these guys? Well they are one the newest FX brokers in the market who are taking a very novel approach to currency trading. They also have ties to the online gambling rackets as their CTO is David Ring who was a key R&D leader at Israeli-based 888.com (a major online casino and poker operator) according to this feature article that came out last fall:
http://www.techcrunch.com/2007/11/27/etoro-makes-forex-trade-childs-play

But this Israeli firm’s ties go much deeper than to just an Internet gambling website (and please spare me the term “gaming.”) They also have connections to none other than Shimon Peres, the President of Israel. It appears Shimon Peres’ son, Chimi Peres, is one of eToro’s private investors:
http://www.pitango.com/team_member.asp?ID=25

So how is eToro standing out in the marketplace aside from their exotic resume? Well they have created the first forex video game. You have to see the screen shots to believe them:
http://www.techcrunch.com/wp-content/etoro_match.jpg
http://www.techcrunch.com/wp-content/etoro_marathon.jpg

But aside from the cute cartoon characters inhabiting its software (which led one trader to state eToro should rename itself “eTarded”) the truth is eToro is just shoveling the same old Bull at traders. What makes me say that? Well, when I asked them if they were regulated they gave me the ol’ Texas Two Step. Check out this chat transcript below:

Daniel: Welcome to eToro! How can I help you?
you: I was interested in opening a new account with you and see that you are based in Cyprus. Are you registered with the Cyprus Securities and Exchange Commission?
Daniel: of course
you: oh good. what is you Cyprus sec number?
you: i don't see you firm listed in their database
Daniel: I'm sorry. I can only give you support regarding our platform
Daniel: for more information you can address our website
Daniel: or retailfx's website
you: but your website says nothing about you sec license
you: what is retail fx's website?
Daniel: http://www.retailfx.com/
Daniel: this is our worldwide broker
you: this website says nothing about your license either
you: so do you have a license or not?
Daniel: I'm not sure what you are looking for
Daniel: i can help you regarding our platform
you: Do you have a Cyprus Securities and Exchange license?
Daniel: we do have a license
you: is it a Cyprus SEC license?
you: What kind of license do you have?
Daniel: I'm sorry... I don't know these details. I can only give support regarding our platform
you: ok do you have an email address?
you: who can I speak to about this?
Daniel: support@etoro.com
you: I just want to make sure you are a legitimate company
you: there are a lot of scammers in fx
Daniel: we are totally legit
Daniel: you can check with IFX
you: who?
Daniel: and the NFA
you: nfa?
you: you have an nfa license?
Daniel: IFX..our US broker
Daniel: we are regulated by the NFA
you: eToro has a nfa license?
Daniel: would you please send us an organized email with all of your questions?

eToro is an Israeli company with a Cyprus address and a British Virgin Islands Registration. Now what kind of business arrangement is that? That is about as unaccountable as you can get. When I asked their chat representative if they have a Cyprus SEC license (which they should have if they have an office in Cyprus and are soliciting customers from Cyrpus) the rep says “of course.”

When I point out that eToro is not listed as having a license at the Cyprus SEC website I’m directed to another company that supposedly has a license, retailfx.com, I find they don’t have a license either. At which point the customer service rep breaks down and blabbers about their arrangement with IFX.

Clearly eToro talks the regulatory talk but they don’t walk the regulatory walk.

So what about this link with IFX? Well it turns out that eToro can’t accept U.S. customers. Hmmm. That’s strange. Plenty of offshore forex brokers accept U.S. customers. Why not eToro? Instead, eToro has to rely on IFX who is apparently white labeling eToro’s Sony Playstation, er, forex trading software.

It’s pretty obvious why eToro can’t accept U.S. customers. It’s because they are nothing more than a gambling shop and online casinos outside the U.S. are not allowed to accept U.S. customers. eToro’s lawyers are obviously worried that Uncle Sam will come after them with a vengeance if they start soliciting customers (not to mention the MGM Grand, Powerball, Pat Robertson, Ralph Reed and Mike Huckabee.)

What does that tell you about the kind of dealing desk these guys are running? The firm is a straight up casino- they only make money if you lose money. It is market making on anabolic horse steroids. In short, it is every currency trader’s worst nightmare come true.

By the way I sent eToro an email asking for clarification on their regulation. Of course there was no reply. Lord somebody fence these guys in…