Proposed NFA Capital Requirement - page 23
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FXQL-Fast Brokers
10:20AM, Still no trading on Fast Brokers. Yes, a Pawn Broker Would Not miss 41 million!!!
I'm not sure what affiliation Aleccohfx has with them but Aleccoh (owner) has just made a special post, decribing them as honest, and that your money is safe...
Yikes! - things must be bad...
does anyone know IBFX's affliation with FXLQ? Didn't IBFX used to clear through FXLQ?
what a nightmare for alot of people. I really feel for them.
Scandal at Forex Liquidity
Of all the scandals I have reported on to date this one is by far the most disturbing. The main reason is because FXLQ appears to have defrauded, not just the trading public, but more importantly U.S. regulators. And did it in such a bold manner as to send chills down the spines of anyone concerned about due diligence.
Yesterday the NFA took a member responsibility action against Forex Liquidity that prevents them from accepting any new customers, distributing customer funds without their approval, and requires that FXLQ provide NFA with a full accounting of their financials, which they have been unwilling to do as of this date:
BASIC Case Summary
Why has the NFA taken this action? Let's go right to the source, the NFA auditor's own affidavit:
In August 2007, during an examination by NFA, NFA noted that FXLQ's June 30,2007, 1-FR-FCM listed as current assets securities with a market value of $35 million. FXLQ represented that this amount was solely attributable to a bond issued by ABN-AMRO. FXLQ further represented that this bond was being held at Malory Investments, a registered broker-dealer.
Ah yes, FXLQ reported adjusted net capital of $36 million on their last CFTC report. These guys have been telling regulators all year they have plenty of capital.
FXLQ has represented to NFA that it obtained the ABN-AMRO bond from its president and principal, Robert Gray, who in turn obtained it from a company called Swiss Imperial Trust A.G. in exchange for contractual services.
I'm curious to know what contractual services Robert Gray provided that earned him a $35 million bond? A quick search on the Internet shows Swiss Imperial does simple accounting work (Swiss Imperial Trust Ag - Zug, Switzerland | Company Profile). So why would a forex dealer be billing an accountant $35 milllion? Isn't it supposed to work the other way around?
On November 28, 2007, NFA received documents from the Financial Industry Regulatory Authority (Finra) (formerly NASD) evidencing that the ABN-AMRO bond and cash, which FXLQ represented were being held at Malory, were actually being held in Switzerland by Swiss Imperial in an account in the name of Malory. NFA has obtained information indicating that the owner of Swiss Imperial is also a part owner and principal of Malory.
Hmmm. This is interesting. So the bond and cash are not sitting in a brokerage account for FXLQ. The bond and cash are actually sitting in Switzerland at Swiss Imperial in an account marked "Malory?" Now that sounds very fishy indeed.
As it appeared that the ABN-AMRO bond had never left the possession of Swiss Imperial, and that the information provided by FXLQ regarding where the bond and other firm assets were being held were not accurate, NFA informed FXLQ that it did not exercise sufficient control over the bond and the cash held by Swiss Imperial to qualify them as current assets. Accordingly, on November 29, 2007, NFA directed FXLQ to cause all firm assets being held at Swiss Imperial to be transferred to a regulated United States financial institution by 5:00p.m. on Friday, November 30th, and provide evidence of such transfer.
No worries, Mr. Gray can just request the funds be transferred back to the U.S. to FXLQ's domestic bank/brokerage account right? Right? RIGHT?!!!
The same day that NFA directed FXLQ to execute the transfer described above, FXLQ represented that it was unaware that the ABN-AMRO bond and firm cash were being held at Swiss Imperial, FXLQ, however, represented that it had been working on transferring the ABN-AMRO bond and firm cash to a United States bank for approximately a week. When NFA asked for the name of the bank to which the assets were being transferred, Gray was unable to recall the full name of the bank, but indicated it included the word "Commonwealth" in its name.
You have got to be kidding me. Let's see, Robert Gray is transferring nearly $48 million in cash and securities and he "doesn't recall" the name of the bank the money is going to?! How can he sit there and tell the NFA that with a straight face? He probably wasn't. I can picture him now scrunched up in the corner of his office, shivering and biting his nails like a man about to be water boarded trying to tell the NFA anything if they'll just go away and let him get back to reaming traders unfortunate enough to sign up with him:
Forums - Any Recommendation for MT4 based Fx Broker
On December 1, 2007, FXLQ sent e-mails to NFA in which it represented that the transfer had been effected from Swiss Imperial to "Commonwealth." FXLQ represented that the transfer only included cash, thereby suggesting that the ABN-AMRO bond had been liquidated.
On December 3rd, FXLQ represented to NFA that the transfer had been made to Commonwealth Financial Network, a registered broker-dealer, and provided NFA with an account number and CFN's web site address.
On December 4, 2007, NFA spoke with CFN and the firm represented that it did not have an account for FXLQ and that the account number that FXLQ provided to NFA was fictitious.
Is Robert Gray a complete idiot? Why the hell would you lie to the NFA and give them a fake account number KNOWING NFA is going to check to see if this account actually exists?
On December 4, 2007, FXLQ's General Counsel forwarded to NFA a letter from a firm identifying itself as "Commonwealth Financial P.M.S", which indicated that FXLQ c/o Robert Gray has funds in the amount of $47,800,000 on deposit in an account at Commonwealth Financial P.M.S. This letter contained CFN's website address. NFA subsequently spoke with CFN's chief compliance officer who indicated that Commonwealth Financial P.M.S. is not in any way affiliated with CFN. NFA staff then informed FXLQ's General Counsel that CFN has represented to NFA that it does not have an account for FXLQ, the account number provided to NFA was fictitious, and Commonwealth Financial P.M.S. is not in any way affiliated with CFN.
The Commonwealth Financial P.M.S. letter was purportedly signed by an individual named Tom Smith. NFA spoke with Tom Smith on December 4, 2007, who confirmed the contents of the letter and stated that Commonwealth Financial P.M.S. was a registered broker-dealer and provided NFA with the firm's purported CRD number. NFA then contacted FINRA and learned that the CRD number provided by Tom Smith was that of a former broker dealer that has not been registered since 1991. FINRA also confirmed that Commonwealth Financial P.M.S. is not currently a registered broker.
Why didn't Rob Gray just get on an airplane and fly out of the country? Why go through this farcical con job in light of the fact that a two year old could see through this BS? But no, Gray continues to spin like Larry Craig after getting caught with his pants down in a Minneapolis washroom.
On December 3rd, FXLQ also provided NFA with net capital computations that purported to show that, as of November 30, 2007, FXLQ is in capital compliance. One computation purported to show the assets that FXLQ claims are at "Commonwealth." A second computation purported to show that even if the assets that FXLQ claims are at "Commonwealth" are non-current assets the firm would be in capital compliance.
"non-current assets." How about "never-were assets." It looks like FXLQ created this bond out of thin air to fatten up their balance sheet. What's the matter FXLQ? Are you ashamed to be a poorly capitalized firm?
FXLQ's October 31, 2007, Form 1-FR-FCM included a liability of accounts payable and accrued expenses of approximately $10 million, which was not included, however, in either of FXLQ's November 30th net capital calculations. On December 3, 2007, NFA requested that FXLQ provide evidence that the accounts payable and accrued expenses listed on its October 31, 2007, 1-FR-FCM had been paid.
Both of FXLQ's November 30th calculations also indicated that over $11.2 million of FXLQ's assets are being held at Malory. FINRA has advised NFA, however, that is has been unable to confirm that Malory's bank accounts have anything approaching this amount.
It's one thing to fib about your company assets. But are they doing this to cover up huge company losses which has left them $10 million in the hole? That of course is the nightmare scenario and could explain why Gray has been desperately trying to throw the NFA off his tracks.
On December 4, 2007, NFA directed FXLQ to transfer funds that it claims are at Malory to the firm's bank account at US Bank. Further, NFA again directed FXLQ to provide evidence that the accounts payable and accrued expenses listed on its October 31, 2007. NFA gave FXLQ until 3:00pm to comply with these directives and FXLQ failed to comply.
This case is pretty serious. And I wouldn't be surprised if the feds break down the door of FXLQ and raid the place. If this bond is fictitious that is the kind of fraud that gets you thrown in the slammer for a number of years. This isn't just a matter of having shoddy book keeping as we have seen with firms such as One World Capital or Concorde Financial. This sounds like gross fraud and if FXLQ is indeed in the hole to tune of $10 million a lot of people are gonna get hurt. It's time to come clean Mr. Gray. What the hell is going on at Forex Liquidity?
and doesnt it just make this thread a complete waste of time, it seems anyone can make up a balance sheet so they can run a forex brokerage.
If the NFA had done their job properly in the first place then FXQL wouldnt be in business, it seems that you can tell the NFA black is white and white is black and that they accept this at face value.
So Forexsaviour why bother reporting on capitalisation at all!!!!
and doesnt it just make this thread a complete waste of time, it seems anyone can make up a balance sheet so they can run a forex brokerage.
If the NFA had done their job properly in the first place then FXQL wouldnt be in business, it seems that you can tell the NFA black is white and white is black and that they accept this at face value.
So Forexsaviour why bother reporting on capitalisation at all!!!!Not sure why you are 'picking' on this thread - forexsaviour has already highlighted many brokers as 'suspect', months in advance, and who are now out of business - this in itself was a valuable public service!
Anyway, I have always found it a good read
If the NFA had done their job properly in the first place then FXQL wouldnt be in business, it seems that you can tell the NFA black is white and white is black and that they accept this at face value.
So Forexsaviour why bother reporting on capitalisation at all!!!!I share your frustration Smotty. FXLQ's adjusted net capital went from $2 million to $36 million between April and May of 2007. Now that is a huge bump up in capital and indicates they got some money from somewhere.
However, unlike other firms like Oanda which issued a press release announcing they had new investors, FXLQ said nothing publically. It appears now they just dumped this bogus bond on to their balance sheet. The NFA should have closely scrutinized this but they appear to have let it slide. It could be because they didn't have proof of wrongdoing and only received that proof after the NASD gave it to them.
In any case, this does not reflect well upon the regulators, or the industry. While I think trust in the CFTC net capital report has certainly taken a hit and I won't look at it quite the same way, it appears FXLQ was a poorly capitalized firm all along- with all the problems that come with being poorly capitalized.
Thank you for your insight Forexsavior.
As a client (victim?) of FastFX/FXLQ I appreciate the commentary you provided. I am a not adept with recognizing all the legalese that is being tossed around in case documents and such so its good to see it put in layman's terms.
dominos falling
in light of FXLQ, velocity4x is an IB for them. v4x sent the following:
We are in the process of transitioning your account to a new server. During this time, you will not be able to initiate new trades but will be able to close any open positions. Once your account has been transferred to the new server, full trading capabilities will return and you will be notified via email. We apologize for any inconvenience this may cause and are working towards a speedy resolution.
We appreciate your patience; feel free to contact us with any questions.
Regards,
The Velocity4x Team...While I think trust in the CFTC net capital report has certainly taken a hit and I won't look at it quite the same way.....
I still can't believe how the CFTC accepted the inclusion of a fake bond in the balance sheet
We assume that the report posted by the CFTC are liquid assets held on well know US institutions.
FXLQ should be investigated right know for fraudulent declarations and cooked books.
And CFTC should take responsibility for present a misleading information to customers.
We also need a major change on laws to issue a Investor Protection similar to Canadian laws.
The last extraoficial information show that FXLQ liquid assets don't reach 50% of the money needed to cover creditors and customers accounts.
If the missed money appear, a fast solution can arrive in 1 or 2 months, or 1 to 3 years if not.
At this stage, this case sound very similar to Neuimex or Refco.