Proposed NFA Capital Requirement - page 21
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Go with the well capitalized ones: FXCM, GFT, Oanda
savior,how about interbankfx and compassfx?
i am going to register with one of them.
Go with the well capitalized ones: FXCM, GFT, Oanda
Anyone here taking this advice needs to go over to Babypips or Forexfactory and stay there.
I'm sorry man but one day you and others will want to trade professionally and these butcher shops should be last on the list even if you're just starting out.
Scandal at One World Forex
Scandal at One World Forex
For months I have been detailing on this thread the agonies of Forex Dealer Dead Pool Member One World Capital and how this poorly capitalized firm was destined for the scrap heap. Earlier this year the NFA accused them of failing to meet basic financial requirements and hauled them before their business conduct committee. Later in the year One World's own traders began to howl in protest over the fact they couldn't withdraw their funds. Then their Chicago Sales staff resigned en masse. Then the NFA wacked One World with a huge six figure fine. Then last week I received another report that their New York Sales staff had resigned en masse.
And now the coup de grace. On Monday, December 3, 2007, the house of cards that was One World came crashing down after the NFA forced them to close their doors. This lame three legged horse was finally put down. One World is now grist for the knacker.
So what finally did in this rotting, fly covered firm? The sordid details can be read in the NFA's own Member Responsibility Action. It is quite instructive and as someone who has been warning traders for months to stay away from these guys; prophetic. The autopsy can be read here:
National Futures Association | News Center
Let's go through it bullet point by bullet point. The reason I wish to subject everyone to this painful tooth scraping is that the collapse of One World provides for a perfect illustration of why poorly capitalized firms are so risky to trade with. So open your mouth and prepare for some bleeding gums...
One World is required to maintain adjusted net capital in an amount of at least $1 million. The firm's latest form 1-FR-FCM reported that, as of October 31, 2007, the firm's total current assets were $2,387,427, its total liabilities were $1,160,200 and that its excess net capital was $227,227.
As I have been saying for months, firms that are barely meeting their capital requirement need to be closely scrutinized. One World was just barely hovering over the $1 million minimum capital requirement. In such examples the odds of a firm fudging their numbers dramatically increase .
Beginning on or about November 2, 2007, NFA began receiving complaints from One World forex customers who told NFA that they were experiencing difficulty in withdrawing funds from their One World trading accounts. For example, one customer told NFA that he had e-mailed a withdrawal form to One World on October 21, 2007. One World did not confirm receipt of the form until October 29th, when it represented that the customer would receive the requested funds within 48 hours. The customer complained to NFA that the funds had still not been provided to him by November 4th. Another customer complained to NFA that he had recently requested a withdrawal from One World in late October but had not received his funds. Both customers subsequently represented to NFA on November 30, 2007 that they still had not received their requested withdrawals.
According to the bulletin boards reports of One World not honoring customer withdrawals had been happening well before November. Not sure why NFA took so long to act on these reports. In any case, the fact that One World isn't honoring these requests as per the NFA is pretty depressing. And it indicates either One World has the most incompetent operations staff on earth, or their finances are a complete shambles.
During November, NFA made inquiry with Walsh regarding complaints from customers who reported that they were having difficulty withdrawing funds from One World. Walsh told NFA that he was investigating anti-money laundering concerns with regard to one of the customers and he failed to make any response to NFA's inquiry about a second customer's problems.
John Walsh has got some cojones I'll say that much. NFA confronts him about failing to give customers their money back and he just blows them off? If the CEO of a firm is so brazen with regulators how do you think his firm is going to treat its own customers?
But now we get to the really good stuff. One of my main arguments on this thread has been that poorly capitalized firms do not have the proper infrastructure to properly run a forex broker dealer. As such these brokers cut corners and keep the worst books imaginable. This is precisely what happened at One World Forex.
NFA asked Walsh to provide it with information as to the amount of One World's liabilities to customers who traded on Metatrader. He responded that Metatrader was very unreliable because it double counted and included demo accounts so it was not accurate. At first Walsh said that he did not know the amount of customer balances on Metatrader, but he later told investigators that the Metatrader balance was probably hundreds of thousands of dollars. He added that he did not know for sure and could not stand by that number. He told NFA that he would wait until the margin equity report was finished before giving NFA any numbers. NFA requested Walsh to provide the margin equity report from Metatrader and Walsh represented that it would take an hour to obtain.
However, after an hour had passed, Walsh told NFA that he had been interrupted and that it would take another couple of hours for him to get the margin equity report. To date, neither Walsh nor anyone else acting on behalf of One World have provided the required margin equity report to NFA despite several requests for the information.
WOW. NFA asks for a simple report on customer liabilities and Walsh can't produce it. Or more likely, WON'T produce it. What is Walsh covering up? My hunch is that his customer liabilities far exceed what he has in cash on hand. That could be the reason he hasn't turned over the requested bank statements NFA has been asking for as well. And what's the deal with Metatrader's "double counting" data? He honestly can't separate demo accounts from live accounts? I don't know much about Metatrader. But either it is the most rinky dink trading platform on the market or John Walsh is once again trying to slip the NFA a micky. In any case let's skip ahead to November 29th where we learn another juicy tidbit.
Investigators were unable to gain entry to the firm's office at first and called Walsh in that regard. He told NFA that the Metatrader platform had crashed overnight and that he was working at home and dealing with a number of customer calls. When Walsh arrived later that day, NFA investigators requested him to provide support for the November activity in One World's Bank of America accounts and Walsh responded that he did not have online access to all of One World's accounts.
There goes that rickety old Metatrader software again! How convenient that it "crashes" just when the NFA wants to look at the company's positions and net exposure. And I love how Walsh is now working from home to answer customer calls! He really is the last man standing at that firm. I wonder if Walsh is offering 24 hour support from his bed. I can picture him now, sitting there in his Homer Simpson tighty whities with one hand buried in a bag of doritos and another clinging to a cordless phone as Oliver Stone's "Wall Street" plays in the background...
Walsh: "thank you for calling One World Forex, John Walsh speaking, how can I help you?"
Customer: "ya the platform won't open, I'd like to go long two lots of USD/JPY."
Walsh: "oh i'm sorry, you're breaking up, ", click...
(next call)
Walsh: "thank you for calling One World Forex, John Walsh speaking, how can I help you?"
Customer: "I requested a withdrawal 7 weeks ago and I still haven't gotten my money! I want to speak to a manager!"
Walsh: "I'm sorry we have discovered that you were involved in money laundering. As a result we have had to confiscate your money. But don't worry. Jasmine Hotpants in Vegas put that money to good use." click...
And so on. But hey, I'm impressed he can even be bothered to pick up the phone to talk to customers after this "server crash."
The rest of the affidavit from the NFA auditor is full of evasions as Walsh and his cronies dodge and weave and do everything possible to prevent the NFA from finding out exactly how much money One World has in their bank accounts and what their customer liabilities are. It really is an amazing farce and frankly quite comical, but for the fact that many of One World's clients could be in serious financial jeopardy if it turns out that One World is in fact on the verge of bankruptcy.
The farce ends with the NFA's auditor standing outside One World's locked office last Friday morning, trying in vain to contact someone to let them in. But no one was around. Everyone at One World has abandoned ship. Here's hoping the customers will be able to make it to the lifeboats before this wreck settles to the bottom of the ocean. And so to John Walsh I sing you the love theme from Titanic...
"Heeeeeeeeeere, faaaaaaaaar, whereeeeeever you are..."
Wow, that's serious, where is the money, in a bond at some place at Switzerland where nobody knows ?
They failed to transfer the money back to US ?
They provide fake account numbers to NFA ?
We heard these type of news of smaller brokers, but FXLQ was the best capitalized MT4 broker.
Mmmm, I don't like this type of news.............it remember me about Refco case.
Wow, that's serious, where is the money, in a bond at some place at Switzerland where nobody knows ?
They failed to transfer the money back to US ?
They provide fake account numbers to NFA ?
We heard these type of news of smaller brokers, but FXLQ was the best capitalized MT4 broker.
Mmmm, I don't like this type of news.............it remember me about Refco case.Ya I don't like it either....I got that email today. Scary times indeed.
Time to brokershop again.
Who uses them as an IB? Any other brokers?
The guy sitting at the top with the money wont even have his name on any of it hes laughing like an evil bastard.
NOTICE OF MEMBER RESPONSIBILITY ACTION:
On December 4, 2007, NFA issued a Member Resonsibility Action ("MRA") against FXLQ whereby:
1. Effective immediately, FXLQ is prohibited from soliciting or accepting any additional customer accounts or customer funds, except as security deposits for existing positions. The prohibition on solicitation includes, without limitation, ceasing solicitation through the firm's website.
2. Effective immediately, FXLQ is prohibited from accepting or placing trades for any customer accounts except for the rollover or liquidation of currently existing customer positions. FXLQ must obtain the ongoing assent of customers to rollover any customer's existing positions.
3. FXLQ is required to liquidate all Forex positions held in any account for FXLQ or any FXLQ principal except for positions that are held to offset FXLQ's exposure resulting from its customers' positions by 3:00 p.m. (PST) on Wednesday, December 5, 2007, and, further, is prohibited from initiating any additional positions in such accounts.
4. FXLQ is prohibited from distributing, disbursing or transferring any funds, including to existing customers, without the prior approval of NFA.
5. Unless otherwise authorized by NFA in writing, FXLQ must transfer any and all assets not currently held at US Bank or an NFA Member FCM to US Bank or an NFA Member FCM by 3:00 p.m. (PST) on Wednesday, December 5, 2007, and provide documentation that such transfer has occurred.
6. FXLQ is required to produce to NFA financial statements including net capital computations as of December 4, 2007. The financial statements must properly reflect all assets and liabilities and the firm's current capital position as well as a listing of all current assets and liabilities and provide third party documentation supporting the existence and location of those items.
7. This MRA shall remain in effect until such time as FXLQ has demonstrated to the satisfaction of NFA that it is in complete compliance with all NFA requirements. In making such a demonstration FXLQ must provide NFA with an internal control report and certified financial statement, which are prepared by an independent public accountant who is registered under Section 102 of the Sarbanes Oxley Act and has demonstrated experience and competence in auditing matters required under Section 404 of the Sarbanes Oxley Act.
The internal control report shall contain, at a minimum, a detailed explanation of the examination performed by the accountant and a representation by the accountant that it has examined and tested FXLQ's system of internal controls to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles ("GAAP"), including those policies and procedures that:
a. Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets and customer liabilities of FXLQ;
b. Provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of management and directors of FXLQ; and
c. Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of FXLQ's assets and customer liabilities that could have a material effect on the financial statements.
The internal control report must contain a representation by the public accountant that it has found FXLQ's system of internal controls has no material weaknesses and that it is adequate for establishing and maintaining internal control over financial reporting by FXLQ.
8. In taking any action under this MRA, FXLQ must act in the best interests of its customers.
This action is effective immediately and is deemed necessary to protect customers because FXLQ has failed to demonstrate that it meets the capital requirements of NFA Financial Requirements Sections 1 and 11. Additionally, FXLQ provided materially false or misleading information to NFA.
The MRA will remain in effect until such time as FXLQ has demonstrated to the satisfaction of NFA that it is in complete compliance with all NFA Requirements. FXLQ is required to provide copies of this MRA, by overnight courier, to all of its customers, to all banks and other financial institutions with which it has money on deposit, and to all persons that solicit or introduce customers to FXLQ or that manage customer accounts held at FXLQ.