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FXLQ Shut down temporarily by NFA

  • #121
  • Dec 19, 2007 11:52am Dec 19, 2007 11:52am
I am exploring that right now, have a lawyer working on how and where to file suite on the NFA for negligence in the matter. email me if you want more info.

Andy Stapleton
[email protected]



Quoting smotty
I know how everyones says its better to have the NFA than not, but i think this time they have a case to answer and i personally think they have been negligent.

When a forex broker suddenly increases its liquidity from 2 million to 40+ million as regulator i think that the NFA have a duty to check that out immediately and obtain absolute proof ... it is clear that the NFA have not done this and to make matters worse, they knew that there was a problem in August, yet still allowed FXLQ to take deposits.

If this doesnt work out, i am seriously considering taking legal action against NFA, i am sure there is an American Lawyer out there who would love to get their teeth into something like this.

I am sorry to say but in my opinion this whole forex regulation in the USA is a complete sham.

Personally speaking i only invested funds on the basis of the capitalisation report completed each month. If that cant be trusted then what do you do. Its about time the NFA took responsibility and the whole industry was cleaned up....

Take a leaf out of the Financial Service Authorities book, all client funds have to be kept in a seperate client account worded in such a way that in the event of bankcruptcy the money cant be touched by creditors and all financial services companies, insurance companies, investment companies have to pay into a central pot, so that in the event of a shortfall there is a central fund to make sure clients arent disadvantaged... It seems to me in the US the companies come first and the suckers second!!!!!
  • #122
  • Dec 19, 2007 4:55pm Dec 19, 2007 4:55pm
Quoting FXAnalytics
I don't really know anything about IB, but I would have to believe if FXLQ was there only source of liquidity, IB right now would be non-functioning; isn't trading at FXLQ suspended right now? How would IB be able to clear any trades off there books if their sole source of liquidity was unable to send orders into interbank...

Maybe someone in the know can clear that up...
Easy,,

FXLQ isn’t the source of liquidity to IBFX, it’s the FCM / retail / FX Brokerage company governed by the CFTC /NFA, the true clearing channel for IBFX from Gray would be under a completely deferent Company Name Gray owns, So if FXLQ go’s’ down doesn’t mean the other Company Mr. Gray owns will not be effected because NFA /CFTC has no rights there..


So in fact even after FXLQ is closed down Grays other companies stay alive , IO would stay away from any company this guys near,
  • #123
  • Dec 19, 2007 5:59pm Dec 19, 2007 5:59pm
Yeah that makes sense... I'm confused though; everyone who has linked the two has used IB and FXLQ as having the relationship. Do you know what the exact company is that Grey is using to provide liquidity to IB or are you speculating that there is another relationship outside of FXLQ that involves IB and Grey...
Trade Small. Be Patient. Learn to Survive.
  • #124
  • Dec 19, 2007 7:02pm Dec 19, 2007 7:02pm
Here it is

http://www.cftc.gov/newsroom/enforce...pr5426-07.html

Release: 5426-07
For Release: December 19, 2007


CFTC Sues Futures Commission Merchant Forex Liquidity LLC Alleging Undercapitalization in Excess of $11.6 Million

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced today that on December 13, 2007, it sued Forex Liquidity LLC (Forex Liquidity), a registered Futures Commission Merchant (FCM) in Santa Ana, California, charging it with being undercapitalized in excess of $11.6 million and also with failing to maintain required books and records.
On December 14, 2007, the CFTC won an asset freeze and other emergency relief that will enable the Commission to freeze the remaining assets of Forex Liquidity and safeguard the interests of its customers.
According to the CFTC complaint, as of November 30, 2007, and perhaps earlier, Forex Liquidity’s net capitalization was below the minimum required by the Commission. As a Forex Dealer Member of the National Futures Association (NFA) offering to be the counterparty to retail customer foreign currency transactions, Forex Liquidity is required to have a minimum adjusted net capital of $1 million; instead, according to the complaint, as of December 7, 2007, it had an adjusted net capital deficit of approximately $11.6 million.
Forex Liquidity is also alleged to have been unable to produce required financial documentation regarding its assets and liabilities. For example, according to the CFTC’s complaint, Forex Liquidity represented in reports and discussions with NFA that its assets at one time included a $35 million ABN-AMRO bond located in Switzerland. The complaint further alleges that Forex Liquidity represented to the NFA that the ABN-AMRO bond (or its proceeds) were transferred to a U.S. registered broker dealer, Commonwealth Financial Network (CFN); however, CFN does not have an account for Forex Liquidity and the account number that the defendant provided to NFA was fictitious.
Accordingly, the CFTC also charged Forex Liquidity with failure to maintain books and records of its business transactions, specifically, current ledgers that accurately reflect its assets and liabilities.
In the ongoing action in the U.S. District Court for the Central District of California, the CFTC seeks an order of permanent injunction against the defendant, monetary penalties, and other relief. The Honorable Cormac J. Carney, U.S. District Judge, issued the restraining order freezing the assets of Forex Liquidity and prohibiting the defendant from destroying documents or denying CFTC staff access to books and records.
The CFTC appreciates the assistance of the National Futures Association in this action.

The following CFTC Division of Enforcement staff members are responsible for this matter: Peter Haas, Richard Foelber, Paul Hayeck, and Joan Manley.
  • #125
  • Dec 19, 2007 7:21pm Dec 19, 2007 7:21pm
Where is FXLQ going to find the money to cover "an adjusted net capital deficit of $11.6 million" ? Looks like it's been operating not only under capitalized but also it kept operating while it didn't have enough money to cover its debts; a serious breach of corporation laws isn't it?
Sorry for those who have account with them but this looks really bad and I cant see much hope there.
  • #126
  • Edited 7:47pm Dec 19, 2007 7:32pm | Edited 7:47pm
It appears FXLQ must be like a casino, taking trades against all account holders. I guess that's what a liquidity provider does. It's strange that he hasn't been paying other FCM... a house of cards that would eventually implode.

This is confusing. If you read the complaint,

Page 12 of Complaint - Bullet 34 - it states that fxlq's adjusted net deficit is $3million as of december 12th... So did they get more money in, but held at different places. Or is this yet another $3million owe by fxlq...

If bullet 34 is true, then actual money they owe is $3million. The charge that they have 11.6 million in liability, was for as of December 7.


CFTC wants $130,000 for each violation. I count at least 12. Time for him to liquidate his house and yatch.


Quoting PipStar
Where is FXLQ going to find the money to cover "an adjusted net capital deficit of $11.6 million" ?
Sorry for those who have account with them but this looks really bad and I cant see much hope there.
Attached File(s)
File Type: pdf enfforexliqcomplaint121307.pdf   118 KB | 338 downloads
File Type: pdf enfforexliqsrorder121407.pdf   141 KB | 338 downloads
  • #127
  • Dec 20, 2007 4:12am Dec 20, 2007 4:12am
They are 3 million short, I have with another a large account there, have been in contact, NFA had required that they pull all funds back into the US for all clients. They did so ,or all but 3m looks like,..

I am glad the CFTC is there, NFA was out to screw us all, at least the CFTC is there to get us back our funds as much as possible, the Jan 4th hearing is the biggie, the CFTC is auditing them now..

Andy <<Cowboy>> Stapleton



Quoting forexedge
It appears FXLQ must be like a casino, taking trades against all account holders. I guess that's what a liquidity provider does. It's strange that he hasn't been paying other FCM... a house of cards that would eventually implode.

This is confusing. If you read the complaint,

Page 12 of Complaint - Bullet 34 - it states that fxlq's adjusted net deficit is $3million as of december 12th... So did they get more money in, but held at different places. Or is this yet another $3million owe by fxlq...

If bullet 34 is true, then actual money they owe is $3million. The charge that they have 11.6 million in liability, was for as of December 7.


CFTC wants $130,000 for each violation. I count at least 12. Time for him to liquidate his house and yatch.
  • #128
  • Dec 20, 2007 7:20am Dec 20, 2007 7:20am
It seems 3million is a doable number for him to raise by Jan 4th... or at least for another firm to buy them out for $3m.

Quoting forexmgr
They are 3 million short, I have with another a large account there, have been in contact, NFA had required that they pull all funds back into the US for all clients. They did so ,or all but 3m looks like,..

I am glad the CFTC is there, NFA was out to screw us all, at least the CFTC is there to get us back our funds as much as possible, the Jan 4th hearing is the biggie, the CFTC is auditing them now..

Andy <<Cowboy>> Stapleton
  • #129
  • Dec 20, 2007 12:57pm Dec 20, 2007 12:57pm
I would think so, and hopefully will happen,

I was talking to a prime broker today about this and other items, here is a clue, there premise now is to watch the NFA clear out ALL of them, one way or the other, and move in...

Several Large Prime brokers are positioning themselves for this. so my STRONG suggestion as I have done, ANY account you have with ANY broker needs to be reduced to what you need + a bit of margin and move the remainder back to your bank account till this is over.

FXLQ will not be the last, frankly, I would say IBFX, GAIN and others like them are also on the chopping block.

Andy<<Cowboy>> Stapleton



Quoting forexedge
It seems 3million is a doable number for him to raise by Jan 4th... or at least for another firm to buy them out for $3m.
  • #130
  • Edited Dec 21, 2007 2:44am Dec 20, 2007 2:39pm | Edited Dec 21, 2007 2:44am
You’re defiantly on the right track with your post, theirs no doubt in anyone (who knows inside scoop) Minds theirs some huge changes for FX right around the Conner, these changes that will Legitimatize retail FX here in the states, the CFTC is so powerful it will also be capable of closing offshore FX brokers, USA has done it the past and will do it again for FX, 08 will be the last of all retail FX bucket shops and their unregistered IB’S as we know them large or small capitalized, it’s time to had the FX08 keys over to the more ethical, established, Capitalized operators, banks and future firms who have mandatory and much sticker compliance full transparencies, no unregistered IB Business, no commingling funds, and!! And theirs nothing anyone of these two bit FX bucket shops large and small and crony IB operators can do about it.

After this long holiday weekend off the bucket shop closures will start up again. If their not a well established bank commodity or futures firm “prime broker” they will more then likely be history by 1 quarter of 08.




Quoting forexmgr
I would think so, and hopefully will happen,

I was talking to a prime broker today about this and other items, here is a clue, there premise now is to watch the NFA clear out ALL of them, one way or the other, and move in...

Several Large Prime brokers are positioning themselves for this. so my STRONG suggestion as I have done, ANY account you have with ANY broker needs to be reduced to what you need + a bit of margin and move the remainder back to your bank account till this is over.

FXLQ will not be the last, frankly, I would say IBFX, GAIN and others like them are also on the chopping block.

Andy<<Cowboy>> Stapleton
  • #131
  • Dec 20, 2007 2:46pm Dec 20, 2007 2:46pm
I was saying two years ago this is what we needed; I hope it all comes to pass as you've described it. This industry needs to have the leash realed in; I'm all for it.
Trade Small. Be Patient. Learn to Survive.
  • #132
  • Edited Dec 21, 2007 2:51am Dec 20, 2007 3:33pm | Edited Dec 21, 2007 2:51am
Quoting FXAnalytics
I was saying two years ago this is what we needed; I hope it all comes to pass as you've described it. This industry needs to have the leash realed in; I'm all for it.

This has been a plan for some time but do to politics took a couple years to enact, hints at all the prime banks and futures firms starting up retail FX operations this past year, they clearly knew what was coming and reacted by setting up retail FX operations , you can also see The change with some of the FX firms trying to take cover by doing deals with larger investment firms and banks; Example FXCM is trying hard by putting together deals to hide behind high profile firms such as Lehman Brothers http://www.mataf.net/en/forex/long-ridge-lehman-brothers-among-investors-agreeing-to-buy-35-of-fxcm/330/ and now trying to legitimatize themselves by branding with dbFX Deutsche Bank http://www.elitetrader.com/vb/showthread.php?threadid=75287&perpage=6&pagenumber=1 not sure if they will succeed only time will tell, but to be safe I would strongly recommend redeeming any funds you don’t need ether tied up or lost do to the upcoming closures…
  • #133
  • Dec 22, 2007 11:20am Dec 22, 2007 11:20am
Quoting JasonF
Well, FxStreet had a good run, they made a mistake and made it public that they had a relationship with InterBankFx and began defending this multiple NFA violator.

What' worse is that they are now censoring valid comments in their defense.
I hope this does not happen here, becuase the word is rapidly spreading about FxStreet and will no doubt hurth their credibility.

Forum operators should know not to take sides in these things. Especially when it comes to defending brokers. But then again if you have your hand in their pocket I guess you have to, but is it worth ruining your credibility? Too bad for FxStreet.
Dear JasonF

We have a relationship with InterbankFX as we have relationships with almost all FDM's in the FX market.

InterbankFX is advertising in our site and appears on our brokers list. To appear in such list you must be regulated in the US, UK, Nordic countries, Switzerland (unregulated but a main financial center in the world), Australia and Japan.

Also, InterbankFX is investing in our MAP program as well as some private investors and GFT.

We never remove posts unless they use bad language, are offensive or are a not proved claim. Even in this last case, many times we leave posts on.

You can check it in a post I made about a supposed link between FXLQ and InterbankFX at my personal blog

http://weblog.fxstreet.com/2007/12/interbankfx-and.html

If InterbankFX was removed from doing business in the FX field by the NFA, it would be removed from FXstreet.com and our MAP relationship stopped. Same as happened to us some time ago with RefcoFX, we were so naive to have them on the site and well everybody knows how their story ended.

I would never defend nor InterbankFX nor any other FDM because I´m not them. I´m not also going to rule them as it is not my job.

I´m going to send the link of this thread to Alberto Muñoz, our Forum manager.

Again, it is not our job to defend no one and I just hope no one from my company will ever brake such rule in FXstreet.com

Our credibility is a must for me and I think we have earned a very good reputation after being honest and helpful for the last 8 years.

Any claim you should have against any FDM is welcome at FXstreet.com as long as it is solid proved. Too many lies are spread all over Forums that never have been and never will be proved.

Francesc Riverola
CEO at FXstreet.com
  • #134
  • Dec 22, 2007 11:23am Dec 22, 2007 11:23am
Hi guys,

I´m terrible sorry, I posted above´s post in a wrong thread

I´m sorry

Francesc
  • #135
  • Dec 22, 2007 12:57pm Dec 22, 2007 12:57pm
Based on CFG's proceedings and time line, this whole process should take about a month.

http://www.cfgtrader.com/

There will be a hearing to allow fxlq to "show cause". If fxlq fails January 4th, all of its assets go straight to receivership and set for liquidation.

According to the CFGtrader.com, that particular case, cfg showed liability of $2-3million. Someone had stepped up to buy them out.

This whole process for cfg started March 21st, hearing March 26, injunction enforced march 29th, April 16th - full transfer to itradefx started, April 25 - full transfer confirmed.

If the liability is much greater, I doubt there will be anyone stepping up to buy them out... or may be, fxlq comes up with the rest of the cash by January 4th, and prevent an injunction.

Happy holidays.

Forexedge

-----
Other useful links:

File march 21, case March 26, injunction march 29
http://www.cftc.gov/newsroom/enforce...pr5310-07.html
http://www.cftc.gov/newsroom/enforce...pr5311-07.html
  • #136
  • Dec 30, 2007 1:19pm Dec 30, 2007 1:19pm
JAn 4th is the date, Got a call from a source, they have a Hearing at court then, they are around 1-3% short of sending everyone back the money, I can't see where they either don't have a buyer, or can't find the funds...

well, I will post again Jan 4th, or 5th when I know more.

Andy <<Cowboy>> Stapleton
  • #137
  • Dec 30, 2007 6:52pm Dec 30, 2007 6:52pm
what a mess...I've opened a segregated account with FXCM UK therefore I should be ok...I also have one with OANDA in the USA and consider that to be fairly safe too...never funded my standard with FXDD and haven't regretted that decision..

I just hope that all of you that are in this recover all your money.
Nihil inimicus quam sibi ipse Marcus Tullius Cicero
  • #138
  • Dec 31, 2007 8:35am Dec 31, 2007 8:35am
  •  onu
  • | Joined Feb 2006 | Status: superior senior member | 746 Posts
Quoting coscorp
what a mess...I've opened a segregated account with FXCM UK therefore I should be ok...I also have one with OANDA in the USA and consider that to be fairly safe too...never funded my standard with FXDD and haven't regretted that decision..

I just hope that all of you that are in this recover all your money.
Hi,
you got segregated account in UK? Are you sure? Regards their information just the first 5000$ are segregated. There is no customer money safety in UK. The same mess as in USA.
So far i found only one segregated account offer from Finex group/Varengold Bank Germany. But min. Lot size is 0.2 and none of my EA´s is taking a trade...and today their platform is disconnected..all strange..

Nevertheless a HAPPY NEW YEAR 2008 to all the the pip hunters
  • #139
  • Dec 31, 2007 10:05am Dec 31, 2007 10:05am
1-3% is really reasonable... if they don't raise 3% and $5million , they have to shutdown, and be sold... Let's hope they come up with the cash to fill the gap. Selling the company will take another 4 weeks. Do you know the absolute amount?

Quoting forexmgr
JAn 4th is the date, Got a call from a source, they have a Hearing at court then, they are around 1-3% short of sending everyone back the money, I can't see where they either don't have a buyer, or can't find the funds...

well, I will post again Jan 4th, or 5th when I know more.

Andy <<Cowboy>> Stapleton
  • #140
  • Jan 1, 2008 4:22am Jan 1, 2008 4:22am
Onu - according to what I was told yes - fully segregated - but thanks for the heads up - I'll get on it straight away...
Nihil inimicus quam sibi ipse Marcus Tullius Cicero
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