Here are some key issues:
- Traders Global is, and has been through the Relevant Period, counterparty to substantially all customer trades. Customers do not trade “live funds” against “multiple liquidity providers” nor do customers share in “trading profits,” as Traders Global claims. In reality, customers trade against Traders Global in an electronic trading environment that Traders Global controls.
- Because Traders Global is the counterparty, when a customer’s trading is successful, any “profits” to which the customer may be entitled come out of Traders Global’s pocket. Indeed, substantially all of these so-called profits come from fees that Traders Global collected from other customers, in a manner similar to a Ponzi scheme. When customers win, Traders Global loses.
- Traders Global claims on its website that customer trades are subject to “commissions” of $3 per lot. Because Traders Global tells its customers that they are using Traders Global’s funds to trade, the customer is led by Traders Global to believe that the commissions are those being charged to Traders Global by a liquidity provider, exchange, or other third party.
- In fact, Traders Global is not charged commissions by any third party on “trades” for which it acts as counterparty. Traders Global fails to disclose, however, that it—not some third party—assesses these commissions. The so-called “commissions” are simply a charge against customer account equity imposed by Traders Global.
- Traders Global uses specialized software to automatically add “delay” or “slippage” to customer orders. Traders Global does this in order to reduce the likelihood, or amount, of a customer’s profitable trading.
- A very small number of customers trading “live” accounts manage to trade profitably despite Traders Global’s attempts to handicap them. After identifying such customers, Traders Global may route some or all of these customers’ orders to an off-exchange leveraged forex and commodities dealer outside the U.S. (hereinafter, the “Dealer”). Traders Global refers to this as “STP’ing” a customer’s account; “STP” stands for “straight-through processing.”
- STP’ing a customer is very rare. Of 24,000 customers with “live” accounts during the Relevant Period, fewer than 100 of them had a single trade STP’d.
- Defendants’ scheme is a profitable one. During the Relevant Period, Traders Global took in approximately $310 million in customer registration fees. During the same period, Traders Global paid out approximately $137 million, mostly to customers in the form of purported trading profits. Traders Global has thus achieved net income of $172 million from its fraud during the Relevant Period.
All traders who traded with MFF should monitor the case closely. The court assigned a temporary receiver, see below:
Anthony Sodono, III of McManimon, Scotland & Baumann, LLC is appointed Temporary Receiver, with the full powers of an equity receiver for Defendants and their affiliates and subsidiaries owned or controlled by Defendants (hereinafter referred to as the “Receivership Defendants”), and of all the funds, properties, premises, accounts, income, now or hereafter due or owing to the Receivership Defendants, and other assets directly or indirectly owned, beneficially or otherwise, by the Receivership Defendants. The Temporary Receiver shall be the agent of this Court in acting as Temporary Receiver under this Order.
