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Proposed NFA Capital Requirement

  • #141
  • Aug 1, 2007 11:03am Aug 1, 2007 11:03am
Forexsavior,
One simple question, can you inform us also for the regualtory actions from NFA and CFTC against the big Marketmakers ?
  • #142
  • Aug 1, 2007 11:09am Aug 1, 2007 11:09am
Quoting forexfun
my favorite example from his is the one company he really badmouthed - itrade fx. first he says they're bankrupt, then when the next report points out that they're not, he has to have the "I was wrong" dragged out of him
I Trade FX reported Negative Capital. That's a pretty stunning figure. I was correct to draw the conclusion they were "close to bankruptcy." The CFTC's capital requirement figure is the only independent source that can be used to judge a firm's financial viability. Since none of the dead forex firms walking make their financials available there is no other criteria to go on.

I think anyone who reads through this thread without bias will see how thorough my posts are. I consistently link back to the CFTC and NFA and Independent news sources. My critics link back to nothing and instead just offer up rants in defense of the dead forex firms walking. Well, your attacks on me didn't dissuade me before and they won't dissuade me now.

The issue is undercapitalization. The NFA, with this proposal, is making it clear it doesn't think that firms below $5 million are properly capitalized. If the NFA thinks that why shouldn't anyone else?
  • #143
  • Aug 1, 2007 11:12am Aug 1, 2007 11:12am
Quoting AKforex
Forexsavior,
One simple question, can you inform us also for the regualtory actions from NFA and CFTC against the big Marketmakers ?
The NFA has taken plenty of regulatory actions against large forex firms as well. But none of them are in danger of going out of business due to this new rule or have committed the kind of fraud that has taken place amongst the smaller firms. As a result it isn't as big an issue or particularly relevant to the new rule change.
  • #144
  • Aug 1, 2007 11:16am Aug 1, 2007 11:16am
Quoting forexsavior
The NFA has taken plenty of regulatory actions against large forex firms as well. But none of them are in danger of going out of business due to this new rule or have committed the kind of fraud that has taken place amongst the smaller firms. As a result it isn't as big an issue or particularly relevant to the new rule change.
Can you tell me the reasons for these regulatory actions against the big firms ?
  • #145
  • Aug 1, 2007 11:30am Aug 1, 2007 11:30am
a lot of technical stuff. defective marketing brochures or failure to disclose things on their website. Nothing sexy. no tales of people running off with grandma's 401k or stuff like that. Hey I've been accused of being a tabloid writer so I have to admit, the big firms don't provide good copy
  • #146
  • Aug 1, 2007 11:47am Aug 1, 2007 11:47am
Quoting forexsavior
a lot of technical stuff. defective marketing brochures or failure to disclose things on their website. Nothing sexy. no tales of people running off with grandma's 401k or stuff like that. Hey I've been accused of being a tabloid writer so I have to admit, the big firms don't provide good copy
Please tell me details and don't speak generally for the big firms!!
You make very good propaganda! By the way who is your broker?
  • #147
  • Aug 1, 2007 12:35pm Aug 1, 2007 12:35pm
Mr Forexsavior
One very important question: Have the clients lost their money from the brokers who shut down ? Please give me a answer for this
  • #148
  • Aug 1, 2007 1:54pm Aug 1, 2007 1:54pm
Quoting forexsavior
I was correct to draw the conclusion they were "close to bankruptcy."
weren't you the person who said you didn't know if it was a mistake or not because people wondered why there was a drastic change from april to may? if you'd like, I can post exact quotes from you to show that.

if you didn't know if there was a mistake (and no matter how much you claim "they'd be screaming bloody murder", unless you are a high-up in the NFA or CFTC, you have no idea what objections they've raised with the NFA or CFTC about that report from April), how do you know you were correct to draw that conclusion? did you backcheck it to be sure there was no mistake on the report? from your answers before, it sounds like a "no."

also note you didn't say "They might be close to bankruptcy based on this report" (which would have been far more responsible) in light of your not-knowing, you said "They're bankrupt! Run Forest run!" (paraphrasing)

Then later you said something about how they apparently didn't go bankrupt, glossed over it and moved on to where you were right.

what I'm reading is that YOU DON'T KNOW, but you labelled them bankrupt anyways because it fit your sensationalist headline. you didn't check on anything, you assumed the only information was that report. you didn't call the cftc (or nfa) to check, you didn't call the company (granted, that would be dubious, but they would open themselves up to an NFA action if they blatantly lied).

the bottomline is, you didn't check, you assumed. you're doing the same with the 5 million, no matter how you spin it, you don't know that the requirements will pass, and you don't know how many of those companies can make higher requirements. you're making claims about how they're the dead walking with no real basis in fact about their ability to meet higher requirements. heck, if you project the numbers, several of those companies (based on their growth shown in backdating reports) will make 5 million by the end of year - which would be the earliest a new requirement would go into place. you didn't bother to mention that either. it's not a guarentee of solvency, but it's about as valid as saying that you know they can't make it based on their current report value.

And you don't understand why people have an issue with how you say things? Corrupt companies make me mad (and you raise some good points about corrupt companies), but your blatant disregard for personal responsibility for what you say is bad as well.
  • #149
  • Aug 1, 2007 2:06pm Aug 1, 2007 2:06pm
Quoting forexsavior
I consistently link back to the CFTC and NFA and Independent news sources.
I thought someone was waiting for you to post something that wasn't a linkback to your own thread. last I read, they were still waiting....

Quote
My critics link back to nothing and instead just offer up rants in defense of the dead forex firms walking.
i don't know about other critics, but my problem is with how you say things and the assumptions you make about companies. you act like the requirement passing is a fact, and I'm sorry, no matter how you spin it, its not. I think it's probable, but it's not in place yet. you imply that companies that are currently capitalized at one value can't make a new requirement - that may or may not be true, you don't know. you imply they're all dead firms walking, but if they're not IF a new requirement goes into effect, you say you have no responsibility to apologize to them for calling them "dead" and being wrong.

basically, you have no obligation to do anything - you talk about how these companies should be honest, but you have no obligation yourself to do so, and you abuse that. you're totally irresponsible with the accusations you sling. going back to old stories about forex companies doesn't prove anything other than "people need to be careful" - a smart adage for anything in life. it doesn't make all the firms on that list "dead firms walking".

Quote
The issue is undercapitalization. The NFA, with this proposal, is making it clear it doesn't think that firms below $5 million are properly capitalized. If the NFA thinks that why shouldn't anyone else?
it is a proposal from committee, meaning that committee thinks that. until the NFA passes it, they HAVE NOT made it clear. and then those firms would have time to make those new requirements. Your argument is akin to "If they're not guilty, they'd do X"..... but if they're not guilty (or in this case, presently required to be at five million), they don't have to do X until required to do so.

if I've said anything factually wrong, please point out where I have.

i can point out where you are factually wrong - the five million proposal has not passed. therefore saying that those companies are "dead" because they aren't at a level of a proposal that hasn't been passed seems premature.
  • #150
  • Aug 1, 2007 2:32pm Aug 1, 2007 2:32pm
Quoting forexfun
i don't know about other critics, but my problem is with how you say things and the assumptions you make about companies. you act like the requirement passing is a fact, and I'm sorry, no matter how you spin it, its not. I think it's probable, but it's not in place yet. you imply that companies that are currently capitalized at one value can't make a new requirement - that may or may not be true, you don't know.
forexfun I'm 100% confident this rule will pass (and when it does I expect YOU to apologize for minimizing the problem all along.) Why am I that confident? Because if you read through the list of companies that have collapsed and gone bellly up and been shut down you can come to no other conclusion than that the answer to this problem is to raise capital requirements.

Quoting forexfun
you imply they're all dead firms walking, but if they're not IF a new requirement goes into effect, you say you have no responsibility to apologize to them for calling them "dead" and being wrong.
The trading public has a right to know that the firms on that list are undercapitalized and that there is a chance they may go out of business when this rule is adopted. It is very clear that you are not in the least bit concerned about the average fx trader and would prefer they not know what is going on in this industry lest it hurt your preferred little firm. So if a trader gets stuck in one of these firms and the principals run off with customer accounts after the rule goes into effect no sweat off your back right? If that happens I expect you to apologize to those traders who have lost their shirts.

Quoting forexfun
basically, you have no obligation to do anything - you talk about how these companies should be honest, but you have no obligation yourself to do so, and you abuse that. you're totally irresponsible with the accusations you sling.
You're getting overly emotional. I have slung no accusations. I have stated my case quite clearly and documented it along the way. The NFA is going to raise capital requirements. Right now the firms on that list are well under those capital requirements. Ergo, firms on that list are in danger of shutting down and customers should beware. The only irresponsible actions on this thread are those people who want to continue to insist that being undercapitalized is not a problem and that customers should ignore the issue.

Quoting forexfun
going back to old stories about forex companies doesn't prove anything other than "people need to be careful" - a smart adage for anything in life. it doesn't make all the firms on that list "dead firms walking"..
Those stories prove why undercapitalization is such a big problem! This is why the NFA has issued this proposal! "Customers Need to be careful?" Good grief you really are callous to the average trader.

Quoting forexfun
it is a proposal from committee, meaning that committee thinks that. until the NFA passes it, they HAVE NOT made it clear.
oh come on forexfun the nfa has made the proposal, nfa spokesman have commented on it. the media has been running this story. But if you want to continue it's no big deal...

It's clear we're not going to agree on this. Bottom line is you don't think undercapitalization is an issue. So be merry and trade with a dead forex firm walking. But other traders have a right to know what they are getting into.
  • #151
  • Aug 1, 2007 2:57pm Aug 1, 2007 2:57pm
Quoting forexsavior
As for FXChant, we simply disagree. Firms under $5 million are undercapitalized in my book. Are they violating current regulations? No. But once again if the NFA is uncomfortable with firms under $5 million (which is why they are proposing this rule in the first place) then I say customers should be concerned as well. This thread is meant to alert them to that concern, which is a pretty damn serious one.
Actually, based on what you just said, we don't disagree once bit.

"Firms under $5 million are undercapitalized in my book." That's stated as your opinion. You are entitled to it, and I have no problem with firms being asked to keep a higher capitalization level.

"If the NFA is uncomfortable with firms under $5 million then I saw customers should be concerned as well." Interesting comment. Is it just some specific number? Next year it will be $20 million? You say $5 million, I say $3 million, someone else says $7...who cares? More is better, perhaps, as it shows who is legit and who is just your neighbor opening up a bucket shop. Having said that, I see nothing in what the NFA has said that sugggests that they are in a rush to put legitimate firms out of business. They are considering and likely to raise the requirement. Some firms will meet, some won't. They will give them all a fair chance to do so. To imply otherwise is silly.

"Are they violating current regulations? No." So true.

Doesn't seem to me that we disagree on anything, and I don't buy the "I'm here to help people but I can't tell you who I am" approach. You have implied things that do not fall into the quotes above that are not remotely true at this time, you have slandered firms that certainly won't disappear once the NFA raises the requirement (I say slander because if I were them, I'd be thinking about that word and you, since another board has tracked you down to a location near a certain brokerage house), and you have been using fear and not the reality on all of the boards. I don't disagree at all with what you said above. But you are here pushing a much deeper agenda.
FXChant Singing the World of Forex
  • #152
  • Aug 1, 2007 3:43pm Aug 1, 2007 3:43pm
Quoting fxchant
I say slander because if I were them, I'd be thinking about that word and you, .
Ah that’s the old FX Chant I’ve come to know! Using threats again I see. Well at least you didn’t threaten the use of violence like you did last time. Perhaps you have “evolved.” In any case since my critics are so fond of analogies here is one for you:

Suppose you are Homer Simpson and you want to buy some doughnuts. There are some lovely doughnut shops in this one particular neighborhood. However, there have been police reports about muggings at many of these doughnut shops. So along comes Barney Gumble to tell Homer not to buy doughnuts in that neighborhood. There are plenty of other places Homer can buy his doughnuts and until the police go in and clean up that neighborhood he should stay out of it. Furthermore the Police are going to put many of these shops out of business anyway. By your rationale what Barney is saying is slanderous because he is lumping in those doughnut shops in the neighborhood where no crimes have occurred with the doughnut shops were there have been crimes.

But the Homers of the world deserve to know about such neighborhoods. Again, just because you don’t care about people like Homer doesn’t give you the right to try and silence the debate because you are afraid it might hurt the doughnut shop you work for. As for the doughnut shop you work for, tell them to kick in the $5 million and stop whining about how “unfair” life is. Because trust me, the NFA is not going to want to hear it when this rule gets passed.
  • #153
  • Aug 1, 2007 4:55pm Aug 1, 2007 4:55pm
Quoting forexsavior
and when it does I expect YOU to apologize for minimizing the problem all along.
Uh.. huh... unlike you, I'm not minimizing it (in fact, I've said I expect it to pass), I'm simply saying it's not in place yet and thus, no one HAS to meet it yet, so indicting them for not doing so is a witch hunt. That IS a fact, unlike this...

Quote
The trading public has a right to know that the firms on that list are undercapitalized

which is the fiction, because by current standards, they are not undercapitalized. that doesn't mean that each and every one of those companies won't go under with new requirements.

it's about responsibility on your end for making statements as much as the companies should be responsible for their actions. the internet has made you one brave individual in your ability to be anonymous.

Quote
So if a trader gets stuck in one of these firms and the principals run off with customer accounts after the rule goes into effect no sweat off your back right? If that happens I expect you to apologize to those traders who have lost their shirts.

Apparently, you have a moral equivalence problem.

I say people should check on their broker and not assume anything. That's not saying "ignore problems! you're all good!" Therefore, you're right, I don't feel morally obligated to apologize for saying "hey, you should be careful, but don't think that just because forexsavior says they're all dying that it's true."

You think of these companies as soulless entities, so you can insult them, belittle them, frighten people from them. I see them as groups of people, some of which are honest and may meet a new requirement, who may be hurt because you feel you have the right to say anything about them that you want.

if you think that is the same thing, and thus I need to apologize, you have a serious reality problem.

Quote
You're getting overly emotional. I have slung no accusations.

The accusation that itradefx was going bankrupt (which... didn't happen) wasn't slung? you're pretty slimy if you think that's not an accusation.

Quote
It's clear we're not going to agree on this. Bottom line is you don't think undercapitalization is an issue. So be merry and trade with a dead forex firm walking. But other traders have a right to know what they are getting into.

how many times can it be said, in how many ways... (and yes, now I'm getting mad, because no one can be this obtuse)

THEY AREN'T UNDERCAPITALIZED. THEY MIGHT BE BASED ON A FUTURE RULE PROPOSAL, BUT THEY AREN'T NOW. if you have evidence they're all undercapitalized by the current proposal, you'd have something. right now, you have guesswork and innuendo, accusations with a bit of historical backing.

people asked you for direct links to nfa/cftc papers on this proposal, so far as I've seen, you've only linked to posts that you yourself did and one news article. that is NOT the same thing.

yeesh.
  • #154
  • Aug 1, 2007 5:02pm Aug 1, 2007 5:02pm
Quoting forexsavior
So along comes Barney Gumble to tell Homer not to buy doughnuts in that neighborhood.
Oh no no no. You're alleging direct fraud by each of those groups in your dead pool, not saying something is going on in that neighborhood.

It's more like you're saying "5 of these donut places have had robberies, and because those five have, Rob's Donut Place, Cathy's Donut Shop, Donutland, etc are basically guaranteed to have problems because there have been robberies in the area." You compound it by insisting they buy security guards for their place or they MUST be corrupt, even though as donut shops, they're not required to do that much yet.

What makes it even more questionable is you sound like you're offering this advice as you yourself walk out of the Krispy Kreme corporate offices after a day of work.


Please don't try to imply you're merely giving out general warnings (if you did, I'd have no issue). You're specifically steering people from specific companies, and as such, your "Barney" comparison is invalid.

And yes, FXChant is right, that is potential slander if you work for one of their competitors. If you doubt that, I can refer you to some lawyer friends who can clarify it for you.
  • #155
  • Aug 1, 2007 5:14pm Aug 1, 2007 5:14pm
Quoting forexsavior
I'm sorry to disappoint your Merlin. But the information I have presented is sourced from one place: The Public Record. I am not privvy to the internal goings on of every forex dealer.
here's what bothers me about your forexsavior. in one breath you say that you have no info except the public info. yet in another breath you are slinging accusations around as if you have inside info. you said that itradefx was bankrupt, and to "run forest run", yet you dont even have any info about the situation. and thats only ONE of the accusations youve made.

i have left this thread open against the better judgment of the other mods. i have done so because i feel that this is an important topic that should not be suppressed at all. but my patience with you are running thin. if you want to save the forex world, you should do your homework and present us with facts. if you slander a company, you should have the facts to back it up. please tread lightly from now on because you have one foot out the door already.
Relax and be happy.
  • #156
  • Aug 1, 2007 5:23pm Aug 1, 2007 5:23pm
forexfun this thread just isn't for you. News Flash: not everyone has the same definition of "undercapitalized" as you do. Yours means if you have the money to meet current regulations you are properly capitalized. mine does not. Why is that? Because as I have demonstrated in all these forex broker stories in this thread there are plenty of firms that were meeting their capital requirement that still went down the tubes in any case. Why? Because the current requirement wasn't enough to save them. THAT'S WHY REGULATORS WANT TO RAISE IT.

As for your obsession with I Trade FX, the CFTC reported they were negative capital. (in fact, the number is STILL negative on that report). negative means you have no money, which means you are flat busted. Since the gov't was saying that it is perfectly legit to point that out. Your problem is not with me, it's with the CFTC. So go badger them about it.

You said "people should check on their broker and not assume anything." Well guess what? One of the only independent reports on the Internet that traders can check is the CFTC Adjusted Net Capital Report. It gives you the only independent look of a firm's financials on the Internet. And that is what I have listed on this thread.

As for your ludicrous statement that I think these companies are "soulless entities" I would reply that I am using a simple standard to judge a firm's health. Do they have the capital necessary to be in this business for the long haul? And that standard is $5 million in the bank. The NFA will soon be using this standard as well.

I find it interesting that you have not shed a single tear for the traders who have gotten burned in this industry. You have not expressed the slightest concern about how bad an image the forex industry has gotten because of all the small bucketshops that have run amok the last few years. Instead you pour out you heart and soul for the firms listed in the dead pool. In forexfun's mind better that hundreds or even thousands of traders lose their funds on deposit with one of these firms than that the feelings of a handful of smaller firms get hurt. To those firms who feel they are being unjustly stigmatized by being associated with this group why don't you simply do the right thing?

Put up the money to meet the coming requirement now and show the industry that you are ready to really step up and be a responsible player.
  • #157
  • Aug 1, 2007 5:34pm Aug 1, 2007 5:34pm
Quoting merlin
here's what bothers me about your forexsavior. in one breath you say that you have no info except the public info. yet in another breath you are slinging accusations around as if you have inside info. you said that itradefx was bankrupt, and to "run forest run", yet you dont even have any info about the situation. and thats only ONE of the accusations youve made.

i have left this thread open against the better judgment of the other mods. i have done so because i feel that this is an important topic that should not be suppressed at all. but my patience with you are running thin. if you want to save the forex world, you should do your homework and present us with facts. if you slander a company, you should have the facts to back it up. please tread lightly from now on because you have one foot out the door already.
In my defense I would re-itereate that the information from I Trade FX came directly from the CFTC Report. I did not simply pull that out of thin air. When a firm reports negative capital on hand that is an astonishing statement. I do not feel it is irresponsible to say "run forrest run" and "close to bankruptcy" when such data is made public. Again that report is the only independent guide to how a firm is doing and many traders are not aware of its significance.

As the moderator if you feel I am out of line of course I will comply with the board's wishes.
  • #158
  • Aug 1, 2007 5:43pm Aug 1, 2007 5:43pm
nice try forexfun. but the fact is all the firms on the list are on that list solely for one reason, the group (neighborhood) they reside in. They reside in the undercapitalization neighborhood of firms below $5 million. Please don't try to pretend this is about one firm or another. This is about the group all these firms belong to. Furthermore you and fxchant's threats are getting tiresome. It's called Free Speech. You don't like it, move to North Korea.
  • #159
  • Aug 1, 2007 6:34pm Aug 1, 2007 6:34pm
Quoting forexsavior
not everyone has the same definition of "undercapitalized" as you do. Yours means if you have the money to meet current regulations you are properly capitalized.
lol, which is probably the dictionary definition

Quote
Because as I have demonstrated in all these forex broker stories in this thread there are plenty of firms that were meeting their capital requirement that still went down the tubes in any case. Why?

Because they were committing all sorts of fraud? Each of your stories isn't a tale of undercapitalization problems (or undercapitalization problems alone), but of other problems that were ongoing even before they were undercapitalized. That means the undercapitalization might not have been a cause, but a symptom of the other behavior. And fraud is not exclusive to the smaller companies.

But the thing you keep leaving unsaid is: just because they're a smaller company doesn't mean they'll commit fraud.

You keep picking companies that are under your mark - that just makes them small. That doesn't automatically lead to fraud. But how you phrase your accusations makes it sound like BECAUSE they're small, they will commit fraud - hence your "dead" list.

It's dishonest on your part, and you don't seem to have to take any responsibility for slander.

And even though it's a free country, that doesn't mean you can say whatever you want. Just as you can't go and shout "FIRE!" in a theater for kicks and not expect to be prosecuted, there are various levels of responsibility for what you say. Otherwise, charges like "slander" wouldn't exist at all. Technically though, I think you're right - you're not committing slander - it's more libel, since its in an electronic text form.

Quote
And that standard is $5 million in the bank.

Not yet, not according to those who actually govern this stuff.
  • #160
  • Aug 1, 2007 8:23pm Aug 1, 2007 8:23pm
Quoting forexsavior
As the moderator if you feel I am out of line of course I will comply with the board's wishes.
all i am asking you is to go easy on the slander and go hard on the facts. i actually think this is a discussion that needs to be had, and for that i appreciate what your doing, but unless we focus on facts and do homework the discussion will have little value.

btw... one very important point here... refco was one of the most well capitalized firms you could put your money with as a retail fx trader, yet thousands got screwed in that deal. the truth is any borker can go belly up, even these Bear Stearns investors cant pull their money out right now. the safe strategy is to spread your money out as much as operationally possible.
Relax and be happy.
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