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Proposed NFA Capital Requirement

  • #901
  • Edited 8:04pm Jun 24, 2008 7:42pm | Edited 8:04pm
Quoting forexsavior
A negative capital number indicates undercapitalization which can lead to a company going straight to court as we have seen with FXLQ, One World, etc...
I admit, I haven't read every post on here (it would take eons, even though I read very fast), but most of your examples had fraud and undercapitalization, or undercapitalization for a firm that was found to be committing fraud? I guess your argument could be that they committed fraud because they were undercapitalized, but I would argue that point.

Quote
I didn't say you were bankrupt but when you are reporting such a number I think it perfectly fair to say you are close.
No no no. You have only a very limited understanding of what that number really meant, and yet you're informing other people what that means. Don't you see the inherent problem with that?

I'm going to try to explain, but keep in mind, I can't explain the specific example, or I'll be relating company information on said incident.

Suppose a company has 100 million in assets (please note, this example is not i-Trade FX - I'm using round numbers to explain). Not all of those numbers have to be reported in net cap... in fact, there are many numbers of ways they aren't to be shown on the net cap numbers (even with the NFA tweaking the formula on occasion). Think of net cap as your audited savings account (admittedly, a limited audit - how much it is audited depends on how old your firm is and how much the NFA wants to look). So maybe you report 5 million plus some more goes on because of open hedges, bank pays, etc. That doesn't mean you don't have other bank accounts - in fact, I would argue that MANY firms are putting some of that money in other areas. Just because your assets are not in direct savings certainly doesn't mean you can't transfer/liquidate other monetary assets or accounts to meet obligations. Net cap is a snapshot of positions versus direct savings on that given day that the report is due. It doesn't mean you have no other assets that can't be moved to offset what you're showing. I can show a net cap position of like 7-8 million and easily still have 92 million more in other accounts (that would be an oddity to have that much elsewhere, but its possible). Our net cap is currently 16 million - do you think we only have 16 million in assets? I can tell you for certain that companies like UBS have more than they're showing.

Our net cap showed a neg on the report date, but we were by no means (from my understanding) close to being bankrupt. But some people (I guess not necessarily you) assumed that was EXACTLY what a net cap meant. That's understandable, but not accurate.

You can argue that net cap numbers should be worked to be a more realistic interpretation of assets, but that's another discussion. I would love to explain more, but its one of those areas where I'm limited in what I can talk about.
  • #902
  • Jun 24, 2008 7:47pm Jun 24, 2008 7:47pm
Quoting fxtrader42
So your saying dont trade with a bank? Do you have any idea how this market really works savior? Who the F*ck cares how companies make money as long as you get a fair price and fair execution? Stick to reporting my forex savior!

I dont agree that IB's should get paid out a portion of the losses but anyone who trades with easy forex or any of the other shady firms out there should do more DD before signing up.
Marketmakers are not necessarily fraudulent. I've heard specifically of an ECN which was paying out IBs to get a share of client losses. I've heard of some NDDs who merely put the DD at their liquidity provider. I've heard of some MMs who are very good. The bottomline is that if someone wants to be fraudulent, they'll find a way, MM or not, and pulling an example of the worst, like easy forex, doesn't say that MMs are all doing this, or even that a majority do.
  • #903
  • Jun 25, 2008 5:58am Jun 25, 2008 5:58am
Quoting ck_itrade
I've heard specifically of an ECN which was paying out IBs to get a share of client losses.
Considering there are only 3 retail ECNs, and one of them (InteractiveBrokers) doesn't have IB relationships, that leaves two: HotSpot and MBT. Care to specify which one?
  • #904
  • Jun 25, 2008 7:32am Jun 25, 2008 7:32am
Quoting Trader KGB
Considering there are only 3 retail ECNs, and one of them (InteractiveBrokers) doesn't have IB relationships, that leaves two: HotSpot and MBT. Care to specify which one?
Since when does Interactive Brokers not have IB relationships? I admit, I don't read their site every single day, but I thought I just talked to someone who was an IB with them...

And as to the specification, I'd rather not. I did a doubletake when I heard about it. In the end, the person could be lying, so I'd rather not toss around names. It was mainly just an example of the odd stuff that flies around this industry.
  • #905
  • Jun 25, 2008 8:39am Jun 25, 2008 8:39am
Quoting ck_itrade
Since when does Interactive Brokers not have IB relationships? I admit, I don't read their site every single day, but I thought I just talked to someone who was an IB with them...

And as to the specification, I'd rather not. I did a doubletake when I heard about it. In the end, the person could be lying, so I'd rather not toss around names. It was mainly just an example of the odd stuff that flies around this industry.

Watch what you say about IB, they hire nerds to sit infront of a computer 24/7 and flip out on anyone who attacks them.....A bunch of scary SOBs
  • #906
  • Jun 25, 2008 9:56am Jun 25, 2008 9:56am
Quoting cka6c
Watch what you say about IB, they hire nerds to sit infront of a computer 24/7 and flip out on anyone who attacks them.....A bunch of scary SOBs
All I said is that they have IB agreements AFAIK - if they get offended by that, they have issues....
  • #907
  • Jun 25, 2008 11:59am Jun 25, 2008 11:59am
It's interesting is that this thread is approaching 1000 posts and its one year anniversary....
  • #908
  • Jun 25, 2008 3:04pm Jun 25, 2008 3:04pm
Quoting cka6c
1)The new capital requirement doesnt make any sense and it was a made up number without any serious calculation or honest intention.

2)I dont need to have an account with FXCM to know that they suck. I dont need to go to Iraq to know its dangerous, and I dont need to get my arm cut off to know it hurts.

People who traded with FXCM complain. Mannnnyyy people have complained.

3)http://www.nfa.futures.org/BasicNet/...tityid=0308179

Here is their record with the NFA.

I rest my case
Hi CK, wow that is really bad. I wonder what people think of trading without a dealing desk at FXCM? I wonder if it causes more problems for FXCM customers? Thxs
  • #909
  • Jun 26, 2008 8:17am Jun 26, 2008 8:17am
Quoting forextrader0
Hi CK, wow that is really bad. I wonder what people think of trading without a dealing desk at FXCM? I wonder if it causes more problems for FXCM customers? Thxs

Many people feel the wrath of the so called (non-dealing desk), so I dont know how trustful they are.
  • #910
  • Jun 30, 2008 11:34am Jun 30, 2008 11:34am
Its seems odd, that a company that big would not be following customer trades or what happens if the computer crashes? No one there to watch it? The reality is that FXCM, probably makes more money with some type of computer program. Can anyone tell the difference? Trades slowing?
  • #911
  • Jun 30, 2008 3:23pm Jun 30, 2008 3:23pm
I have been pressed for time and thus the Caveman Challenge has floundered as a result. But the cavemen are coming off three straight winning weeks. The Savior misunderestimated the knuckles dragging, club wielding, forex tabulating Australopithecines churning out signals over at cavemanforex.com

While only a fool would judge a signal provider favorably after checking out only a handful of trades amongst hundreds I will admit these cavemen have proved they are far superior to the monkeys who worshipped that stone slab in the opening scene from a Space Odyssey 2000.

So the Savior retracts his dis-endorsement of cavemanforex. Judge them by their numbers, not their body hair and sloped foreheads…
  • #912
  • Jun 30, 2008 4:18pm Jun 30, 2008 4:18pm
Quoting ck_itrade
I admit, I haven't read every post on here (it would take eons, even though I read very fast), but most of your examples had fraud and undercapitalization, or undercapitalization for a firm that was found to be committing fraud? I guess your argument could be that they committed fraud because they were undercapitalized, but I would argue that point.

No no no. You have only a very limited understanding of what that number really meant, and yet you're informing other people what that means. Don't you see the inherent problem with that?

I'm going to try to explain, but keep in mind, I can't explain the specific example, or I'll be relating company information on said incident.

Suppose a company has 100 million in assets (please note, this example is not i-Trade FX - I'm using round numbers to explain). Not all of those numbers have to be reported in net cap... in fact, there are many numbers of ways they aren't to be shown on the net cap numbers (even with the NFA tweaking the formula on occasion). Think of net cap as your audited savings account (admittedly, a limited audit - how much it is audited depends on how old your firm is and how much the NFA wants to look). So maybe you report 5 million plus some more goes on because of open hedges, bank pays, etc. That doesn't mean you don't have other bank accounts - in fact, I would argue that MANY firms are putting some of that money in other areas. Just because your assets are not in direct savings certainly doesn't mean you can't transfer/liquidate other monetary assets or accounts to meet obligations. Net cap is a snapshot of positions versus direct savings on that given day that the report is due. It doesn't mean you have no other assets that can't be moved to offset what you're showing. I can show a net cap position of like 7-8 million and easily still have 92 million more in other accounts (that would be an oddity to have that much elsewhere, but its possible). Our net cap is currently 16 million - do you think we only have 16 million in assets? I can tell you for certain that companies like UBS have more than they're showing.

Our net cap showed a neg on the report date, but we were by no means (from my understanding) close to being bankrupt. But some people (I guess not necessarily you) assumed that was EXACTLY what a net cap meant. That's understandable, but not accurate.

You can argue that net cap numbers should be worked to be a more realistic interpretation of assets, but that's another discussion. I would love to explain more, but its one of those areas where I'm limited in what I can talk about.
Gosh, I had a funny feeling this post would be ignored.
  • #913
  • Jun 30, 2008 4:34pm Jun 30, 2008 4:34pm
Quoting opie999
Gosh, I had a funny feeling this post would be ignored.
Sorry Opie. on my to do list (along with those blasted troglodytes).

CK is correct in that net capital numbers do not necessarily include all of a firm's actual assets. But they also do not necessarily include all of a firm's actual liabilities as well. as far as i'm concerned it's a wash.

Look, the net capital report isn't perfect (as FXLQ has proven). But again it is the only independent financial figure the trading public can use in evaluating a firm's financial health. And it has been remarkably accurate in that the firms on that report listed with low net capital have the highest blowup rate by a country mile.
  • #914
  • Jul 1, 2008 7:30am Jul 1, 2008 7:30am
Quoting forexsavior
I have been pressed for time and thus the Caveman Challenge has floundered as a result. But the cavemen are coming off three straight winning weeks. The Savior misunderestimated the knuckles dragging, club wielding, forex tabulating Australopithecines churning out signals over at cavemanforex.com

While only a fool would judge a signal provider favorably after checking out only a handful of trades amongst hundreds I will admit these cavemen have proved they are far superior to the monkeys who worshipped that stone slab in the opening scene from a Space Odyssey 2000.

So the Savior retracts his dis-endorsement of cavemanforex. Judge them by their numbers, not their body hair and sloped foreheads…
You are an annoying nerd that deserves a major wedgie and a slap
  • #915
  • Jul 1, 2008 2:03pm Jul 1, 2008 2:03pm
… and into the light. For years ACM has operated on the fringes of the legitimate forex dealer world but they have now seen the light. ACM is the newest registered forex dealer to become a member of the NFA.
http://www.nfa.futures.org/basicnet/Details.aspx?entityid=0388715

This move coincides with ACM’s move to get a banking license in Switzerland. Looking forward to seeing that first net capital number boys…
  • #916
  • Jul 2, 2008 3:25pm Jul 2, 2008 3:25pm
It has been one year since the Savior started posting about the misdeeds and misadventures of the undercapitalized and the criminally minded in the retail foreign exchange world. To mark that anniversary here is a rundown of the top stories from a year of woe and sloth in retail forex. Cue up the Benny Hill Music…

1) One World Capital Blows Up
Without question this former forex dealer is the poster child of this thread. In July of 2007 I reported on One World’s shoddy book keeping as exposed by the NFA. I closed that post with this prediction: “In short, One World is a classic Dead Forex Firm walking. Firms like One World are the reason the NFA is going to raise capital requirements. And when they do, does anyone honestly believe the One World's of the world will survive?”
http://www.fxstreet.com/forum/showpost.php?p=5102&postcount=6

In August I did a follow up report titled “One World Forex with One Foot in the Grave” detailing the many complaints traders were making about One World Capital, in particular the problem customers were having withdrawing funds. These reports coincided with information I was being fed that One World was in dire straits and that their sales staff had resigned en masse.
http://www.fxstreet.com/forum/showpost.php?p=5976&postcount=39

In September the news grew worse as customers confirmed to me they were having great difficulty getting money out.
http://www.fxstreet.com/forum/showpost.php?p=6308&postcount=51

Finally, the firm slipped beneath the waves in December just as the new capital requirements were kicking in.
http://www.fxstreet.com/forum/showpost.php?p=8337&postcount=92

The final death blow came on December 13th after the CFTC raided the joint and put them out of business for good.
http://www.fxstreet.com/forum/showpost.php?p=8597&postcount=106
http://www.fxstreet.com/forum/showpost.php?p=8632&postcount=108

2) The Forward Forex Follies
Of the many firms that went belly up in 07’ perhaps known was more humorous to observe than NFA member Forward Forex. These two posts are must reads. Upon having the NFA enter his company’s office the CEO of the firm, Onelio Manuel Murias, fled the premises likes a scalded hound. The firm was shut down shortly after.
http://www.fxstreet.com/forum/showpost.php?p=5224&postcount=8

Digging through wreckage of the firm one finds a whole cast of crazy characters right out of One Flew Over the Cuckoo’s Nest. Here is a typical day in the life of a Forward Forex salesman:
http://www.fxstreet.com/forum/showpost.php?p=5303&postcount=11

“And on and on it goes. Customers are pressured into sending in their 401k money or to take out second mortgages, which are then promptly flushed down the drain in worthless options contracts. Sales agents are described as harassing, berating and screaming at customers to send in money. One "Customer Service" representative tells a distraught customer who is losing his shirt that their sales agent (who else but the notorious Blauch) can't be reached because he has "had a heart attack" and then finishes the conversation by saying "sorry, but this is the chance you took." And my personal favorite, “sales agents throwing chairs across the room in fits of rage.”

Indeed, that is the chance you take with poorly capitalized firms.

3) Strolling through Maggot Mile
This story highlighted the loathsome villainy of Worldwide Clearing, one of the many seedy bucket shops populating South Florida. I also pointed out that another NFA registered forex dealer, Nations LLC, was inhabiting the same address and made the following prediction, “Anyone want to make odds on how long it will be before Nations gets shuttered? Perhaps the folks over at Intrade can add a dead forex firms expiration date contract to their prediction market. If so, I’m going long on Nations going under. And I ain’t worried about a margin call…”
http://www.fxstreet.com/forum/showpost.php?p=5243&postcount=9

A week later that is exactly what happened.

4) Nations LLC Bites the Dust
The collapse of Nations was entirely predictable for anyone who did a cursory background check on them. Cause of death? Undercapitalization. Pure and simple.

http://www.fxstreet.com/forum/showpost.php?p=5325&postcount=12
http://www.fxstreet.com/forum/showpost.php?p=5349&postcount=14
http://www.fxstreet.com/forum/showpost.php?p=6359&postcount=53
http://www.fxstreet.com/forum/showpost.php?p=6669&postcount=59

5) Underwater Udo
This self described “scuba rogue” was sent to the clink for using customer funds to buy himself cars put his wife through school and go deep sea diving all the while sending his customers statements telling them they were making a killing when in reality he was spending their money to fund his own lavish lifestyle.
http://www.fxstreet.com/forum/showpost.php?p=5713&postcount=27

6) Switzerland’s Swiss Cheese Regulation
Meanwhile in Switzerland gangs of scheming thieves were wreaking havoc in what had become the most notorious forex backwater on earth. I was quick to expose the lie put forth by Swiss forex dealers that their membership in anti-money laundering associations like ARIF was regulation comparable with the FSA or NFA for example.
http://www.fxstreet.com/forum/showpost.php?p=5950&postcount=38

Following that came some muckraking stories on Tradex Swiss AG. The Tradex story made national headlines as well.
http://www.fxstreet.com/forum/showpost.php?p=6308&postcount=51
http://www.fxstreet.com/forum/showpost.php?p=6641&postcount=58
http://www.fxstreet.com/forum/showpost.php?p=7049&postcount=70

Following the Tradex debacle Swiss authorities had to shut down another bucket shop, Aleccoh FX, which was being run by some shady character at the Forex TSD bulletin board who hides behind a George Soros avatar.
http://www.fxstreet.com/forum/showpost.php?p=11745&postcount=132
http://www.fxstreet.com/forum/showpost.php?p=11766&postcount=133

Finally, the stench of Switzerland’s rotting forex broker dealer corpses became so pungent the Government stepped in and demanded everyone get a banking license pronto: http://www.fxstreet.com/forum/showpost.php?p=8632&postcount=108

Coming Tomorrow- Part II of the Savior’s Greatest Hits
  • #917
  • Jul 3, 2008 1:18pm Jul 3, 2008 1:18pm
You didn’t think the Savior would forget such criminal masterminds as Robert Gray or overlook the smooth talking shysters hustling and bamboozling the public at places such as Easy Forex or FX Open did you? On with the show…

1) Forex Bastard’s Babe Bound for Big House
The sordid tale of Forex Bastard (aka Dmitri Chavkerov) and his mistress from Russia captivated the forex world after it was learned she actually got her golden ticket to America in a sham marriage that the Bastard himself presided over!
http://www.fxstreet.com/forum/showpost.php?p=12511&postcount=159

2) Dirty Rotten Scoundrel
The collapse of Forex Liquidity is perhaps the greatest con job ever committed in retail forex. It involved the forging of a fake bond valued at almost $40 million. This fake bond was used by FXLQ to fulfill their net capital requirement and for months they got away with it. Eventually the hoax was uncovered and FXLQ was shuttered by regulators and forced into bankruptcy:
http://www.fxstreet.com/forum/showpost.php?p=8382&postcount=95
http://www.fxstreet.com/forum/showpost.php?p=8491&postcount=102
http://www.fxstreet.com/forum/showpost.php?p=8491&postcount=109

But digging deeper one finds that Robert Gray has a long history of malfeasance in the forex industry.
http://www.fxstreet.com/forum/showpost.php?p=11817&postcount=134
http://www.fxstreet.com/forum/showpost.php?p=11817&postcount=137

He has worked at over a half dozen different forex dealers just in this decade alone hopping from firm to firm (sometimes stealing the previous firm’s clients on his way out the door) always hustling, always scheming. Today Gray finds himself in deep legal manure but he’ll get no help from the forex community that has come to loathe him as this Irish ballad can attest to:

Quote
I read at one of these links that Robert Gray has an Irish passport and that if things ever get too rough he can always hop on Aer Lingus and live out his days shepherding sheep on a quiet farm outside Galway. Well, should that day come I'm sure the forex trading community will sing in unison:

Oh Robbie Boy, the pipes, the pipes are calling
From glen to glen, and down the mountainside.
The summer's gone, and all the flowers are dying.
'Tis you, 'tis you must go and we gladly say goodbye.

But come ye not back when summer's in the meadow
Or when the valley's hushed and white with snow,
'Tis we'll dread you be there in sunshine or in shadow.
Oh Robbie Boy, Oh Robbie Boy, we loathe you so...


3) The Running Man
These posts detailed the antics of Mr. Ryan Nettles who cut a Genghis Khan like swath through the forex industry. His war with Craig Karlis of Tradex Swiss AG fame became grist for the forex tabloids. He then treated the NFA with equal contempt when another one of his firms (Tradeco) went down the toilet in the summer of 2007. Last he was heard hawking his Weekend at Bernie’s like dead corpse of a company, Finex, to the poor sods at Varengold. Someone sign this man up for the 400 meter relay at the Olympics!
http://www.fxstreet.com/forum/showpost.php?p=8404&postcount=99
http://www.fxstreet.com/forum/showpost.php?p=8405&postcount=100

4) Metatrader Misery
“What happens when a business deal goes bad? You get bitterness, recriminations, machinations and vows to get even. This appears to be what happened after Poltek FX and FX Open parted company.”

Such is the opening to two investigative pieces I did on the broker war between Poltek FX and FX Open. This bloody civil war spilled over into numerous bulletin boards as each side released damaging information about the other in an attempt to discredit one another. In the end they both wound up deeply discredited themselves.

These posts also detailed how risky some of these small metatrader brokers are. There isn’t a shred of transparency with these firms and it is impossible to do any kind of background check on them because they are not regulated and won’t even tell you where they are based or who owns the company. It is a leap into the dark that too many traders have been eager to take.
http://www.fxstreet.com/forum/showpost.php?p=11956&postcount=140
http://www.fxstreet.com/forum/showpost.php?p=11956&postcount=141

5) Shark Hunting in the Caribbean
This post told the story of Mitch Vazquez and the gang at GCI who were closed down by the CFTC in 2002 only to emerge from the ocean like Jaws himself and start circling the waters off the coast of Belize, in defiance of the very court settlement Vazquez had apparently agreed to. Oh by the way this deadly man-eating squalus is also known to inhabit the lakes of Switzerland in the guise of Forex.CH. Swimmers beware.
http://www.fxstreet.com/forum/showpost.php?p=12145&postcount=145

6) Easy Forex Exposed
Back in November of 2007 the Israeli media was running stories on the sales practices of Easy Forex. Quoted in one report was an Easy Forex solicitor who said “I had this evil grin on my face one day, when a client lost $35,000 in a quarter of an hour. A guy gets wiped out - I get my commission. A guy comes up a winner and turns a profit - I pay."
http://www.fxstreet.com/forum/showpost.php?p=8043&postcount=87

A lawsuit is pending in an Israeli court but when television crews are quoting former salesmen taking glee in their clients losing their shirts the trading public shouldn’t be too worried regarding the judge’s ruling. Stay away from these guys!

Last month some ex-traders put even more heat on Easy Forex claiming all sorts of irregularities including tales about Easy Forex’s “Net Deposit Method.” A must read for anyone concerned about the dealing and sales methods of market makers.
http://www.fxstreet.com/forum/showpost.php?p=13168&postcount=174


Two Volumes down, with more to come I’m sure. There is still a lot of mucking out to do in the FX Barnyard and there is still a lot of time to pass until the CFTC comes out with its new rules. In short, there is still much to be written. And so it shall be.
  • #918
  • Jul 6, 2008 4:56am Jul 6, 2008 4:56am
Quote
“I saw people with clients that made money for many months. They use to give him such bad service. Answer unpleasantly… There was a way of life in the company, a way of life… when a client was making profit they use to shout, the son of a *****, move away form here. The guy is making profit, he is destroying my account. He is destroying my salary. Fly from here, go to a different company. They gave him bad service to force him to move to a different company because it was on their expenses.


no wonder I'm getting such appalling attitude and service from my broker! LOL
  • #919
  • Jul 8, 2008 7:00pm Jul 8, 2008 7:00pm
The NFA has just blown the lid off I Trade FX’s finances. I Trade FX has had a wild financial history going from $6,500,000 in adjusted net capital in March of 2007 to
$-3,000,000 in April of 2007 then up to an astonishing $34,000,000 by December of that same year. Last month the firm took a huge net capital drop down to $16,000,000. Who knows what it will be next month. But judging from this just released NFA BCC action against the firm we are beginning to get an inkling why the firm’s numbers are all over the place:

http://www.nfa.futures.org/basicnet/Case.aspx?entityid=0367140&case=08BCC00014&contrib=NFA

First the NFA reveals this juicy little tidbit about I Trade FX’s customer base:

Quote
…the firm had approximately $10 million in customer liabilities and approximately 3,000 active customer accounts, though only nine of these accounts had more than $50,000 in equity.


For a firm that saw its net capital grow from a little over $1,000,000 in 2007 to $34,000,000 by the end of the year that is a TINY customer base. Only 3,000 accounts? Only NINE accounts with equity of over 50k? The firm is barely doing any business. So how did their capital figure grow to such a huge amount?

Answer per the NFA: David Smith

Who is David Smith? Well he is famous in Jamaica for starting a couple currency trading clubs (Olint Corporation & TCI FX Traders) that racked up huge profits. Only problem for Mr. Smith was that he neglected to register with Jamaican authorities and in 2006 they swooped in and raided his place of business seizing everything in sight. The raid was upheld by the Jamaican Supreme Court last year. The Government has yet to charge Smith with any crime and in the meantime he has shuffled on over to the Turks and Caicos Islands to await the outcome of the investigation: http://www.jamaicaobserver.com/magazines/Business/html/20060316T220000-0500_100771_OBS_DAVID_SMITH_ON_THE_BUSINESS_OF_CURRENCIES_TRADING_.asp

But while he was awaiting his fate in Turks and Caicos he continued to operate his Olint and TCI accounts at I Trade FX. And this is what has so concerned the NFA.

In 2007. when NFA got wind of the Cease and Desist order against Smith they asked I Trade FX to turn over Smith’s bank records since he was a principal in the firm. I Trade FX could not get Smith to comply and so they dumped him as a principal. But the NFA didn’t let the matter die there. They began digging through Smith’s trading activity at I Trade FX (particularly his Olint and TCI accounts). Examples of Smith’s activity cited by NFA included:

Quote
…NFA reviewed the activity in an account Olint opened with I-Trade in September 2006. The Olint account opening documents indicated Smith and his wife owned Olint and that the funds in the account came from them only. During the first two months this account was open, no trading activity occurred; however, during this time, Olint made four deposits totaling approximately $59 million and eight withdrawals totaling about $35.5 million.


Several more examples like this are cited in the NFA report including this one:

Quote
Between August 2006 to May 2007, Olint and TCI deposited almost $100 million into its trading accounts at I-Trade, but only a small percentage of these funds were used for trading purposes. By May 2007, Olint and TCI had withdrawn the vast majority of the funds from its I-Trade accounts. However, approximately $50 million of the funds which Olint and TCI withdrew were sent to JIJ Investments, a company owned by Martinez and his brother and father, Jacob and Jared Martinez (owners of I Trade FX).


What the NFA is charging I Trade FX with is failure to notify NFA of suspicious activities, not money laundering itself. But it does raise very troubling question about the people I Trade FX is associating with.

I Trade FX responded in a radio interview in which they directly contradicted some of the NFA’s charges (Smith was only a minority shareholder according to I Trade FX.) But in one eye popping segment of the interview David Smith and I Trade are busted by the interviewer on the question of “why wouldn’t David Smith give the NFA his bank records?” I Trade FX claimed Smith’s lawyers felt NFA had no jurisdiction to ask for Smith’s bank records and so Smith declined. Ten minutes later David Smith gets on the phone and states the NFA never asked him for his bank records and that I Trade gave NFA that response because Mr. Smith needed more time to put his records in order. Smith quickly back tracks when he gets called out on his original answer and in general gave a less than stellar performance. This radio interview was just conducted at nationwidenewsnetwork.com and is a must listen:
http://boomp3.com/listen/byus88nrr_h/dsm-interview_provider-investforlife

This is big news in Jamaica even if most people in the United States have no idea who David Smith and I Trade FX are. At the end of the interview the interviewer asks David Smith why customers of Olint aren’t getting paid their monthly returns. Smith has no answer and after an agonizingly long pause throws out that his “brokers” won’t give him the funds and he doesn’t know why. The credibility of David Smith crumbles by the hour and his constant references to himself in the third person in this interview only damage him further.

It may be that we have only touched the tip of the iceberg with this story so stay tuned as this investigation moves forward.
  • #920
  • Edited 9:44pm Jul 8, 2008 9:29pm | Edited 9:44pm
if i was a customer i would be pulling my money out now, here's more info

http://wordpress.com/tag/david-smith/
If I Go Broke Trying Then I Will die happy.
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