CFG shut down by NFA

Quoting Flyn

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For any of you unlucky enough to have funds lodged with CFG (Forefront Investments Corporation), their operations have been suspended by the NFA. Details on the cfgtrader website.

I was only using them via a managed account and have only lost a small amount. Other people I know are less fortunate.

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Quoting Flyn

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For any of you unlucky enough to have funds lodged with CFG (Forefront Investments Corporation), their operations have been suspended by the NFA. Details on the cfgtrader website.

I was only using them via a managed account and have only lost a small amount. Other people I know are less fortunate.

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Quoting FXCM Rep

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Under the proposed agreement between CFG Trader and FXCM, no CFG client will lose money due to the under-capitalization of CFG Trader. If the NFA and CFTC do not approve the agreement, there is no certainty that CFG clients will receive 100% of their funds.

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Quoting merlin

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sounds like you CFG clients better get on the phone with the NFA

jokes aside, its terrible to see something like this go down

never thought i would say this, but im glad the NFA is cracking down. it will be good for the industry.

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In some jurisdictions, and only then in restricted circumstances, firms are permitted to effect off exchange transactions. The firm with which you deal may be acting as your counterparty to the transaction. FOREFRONT INVESTMENTS CORP functions as a direct counterparty to Traders in many currency transactions. FOREFRONT INVESTMENTS CORP neither offers the right to offset, nor guarantees a market in which to offset, transactions it effects as counterparty. Therefore, it may be difficult or impossible to liquidate an existing position, to assess its value, to determine a fair price or to assess the exposure to risk. For these reasons, these transactions may involve increased risks. Off exchange transactions may be less regulated or subject to a separate regulatory regime. Before you undertake such transactions, you should familiarize yourself with applicable rules and attendant risks.

Quoting stockwet

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I can't tell you how I found out this next piece of info, but, I can tell you it is HIGHLY credible. The founder of Forefront, the guy who basically ran both CoesFX and Forefront/CFG into the ground, is planning on opening a new firm. BEWARE traders. When I know the name, I'll post here at the site.

FYI: CFG is the firm that is the subject of my original Stop Hunt thread.

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Quoting tycan

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Hello.........

I am new to the forum and a current investor with CFG. I have been advised, that no clients will lose funds. It is because they are NFA regulated and all deposits were FDIC insured. Right now, the receiver is reviewing whether or not to let FXCM step in and purchase. This is what I am told, so shouldn't it be true? I am not a U.S. citizen, so don't know all laws surrounding currency trades in the U.S. Thanks.

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Quoting FXCM Rep

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FXCM Makes Offer to Rescue 3,800 Forex Trading Accounts of CFG Trader:

NFA and CFTC Currently Reviewing Offer

March 26, 2007

· CFG Trader, a Richmond, VA foreign exchange trading company, was forced to liquidate all open trading positions by the NFA on March 21 of this year, because it failed to meet NFA’s capital requirements;
· Forex Capital Markets LLC (FXCM) has agreed to accept the CFG Trader accounts – representing approximately 3,800 individual traders, pending regulatory approval. CFTC and NFA approval are required in order for the agreement reached between CFG Trader and FXCM to be consummated;
· FXCM is prepared to contribute approximately $1 million dollars to make up the difference between the assets of CFG Trader and the funds owed to CFG clients due to under-capitalization, should the CFTC and NFA approve the transaction;
· Under the proposed agreement between CFG Trader and FXCM, no CFG client will lose money due to the under-capitalization of CFG Trader. If the NFA and CFTC do not approve the agreement, there is no certainty that CFG clients will receive 100% of their funds.


These announcements were made by Drew Niv, CEO of Forex Capital Markets, the global currency trading firm.

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The Commission also notes that recently an unrelated firm, Forex Capital Markets LLC (FXCM), has issued a press release which contains inaccurate information relating to the proceedings in this matter. Specifically, FXCM inaccurately asserts that the CFTC’s approval is required for any transfer of customer accounts to another forex dealer. Contrary to FXCM’s claims, the court appointed a receiver who will independently assess offers for Forefront’s assets.

Quoting dswk

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US Retail Forex Firm's Assets Frozen; 3,800 Clients Cold
29.03.07 17:20:00- DJBN
By Dan Molinski OF DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- A retail foreign exchange trading company has had its assets frozen after failing to meet minimum net capital requirements, and its 3,800 day-trader customers might have trouble getting their money back. The action by a U.S. District Court judge comes came after it was discovered that Forefront Investments Corporation, which also goes by the name CFG Trader, had liabilities of $8 million but assets of just $6.8 million. Rules require such firms to maintain assets of $1 million more than their liabilities. The Commodity Futures Trading Commission, a government watchdog, said Tuesday it filed an official complaint against the Richmond, Va.-based company, charging it with "undercapitalization by more than $2.2 million and record-keeping violations." The complaint seeks a "permanent injunction against the defendant, monetary penalties and other relief," said the CFTC, which monitors futures trading and retail forex markets and market participants. The U.S. District Court judge who froze Forefront's assets March 21 also prohibited it from destroying documents or denying CFTC staff access to books and records, the CFTC said in a statement. Paul Hayeck, associate director of enforcement at the CFTC, said about 3,800 retail forex customers have accounts with Forefront. The CFTC is hoping that by freezing Forefront's assets, customers' investments may be protected, he said. Working alongside the CFTC on the case is the National Futures Association, a self-regulatory agency that also serves as a watchdog for U.S. futures trading. Larry Dyekman, the NFA's director of communications and Education, said that during the past month it repeatedly sought to reconcile the problems with Forefront, but without success. A document from the NFA posted on Forefront's Web site details those efforts, which began with an audit on March 5. According to the eight-page document, Forefront's accounting consultant, Richard Lani, said at one point that it would be "a fair statement to say that the firm does not know (its) financial status." Dyekman said the case highlights the dangers lurking for individual investors who decide to participate in retail foreign exchange trading. "It's a perfect example of what we've been telling people ... their funds (in spot retail forex trading) are not protected," Dyekman said. It wasn't clear how much of Forefront's $8 million in liabilities were owed directly to customers. No one was immediately available for comment at Forefront, which began operations in 2003. But a notice on the company's Web site Thursday said: "In the next 24 hours, CFG Trader (Forefront's retail name) will be making an announcement regarding the status" of clients' accounts. The number of retail foreign exchange firms has exploded to about 37 firms from three five years ago, the NFA's Dyekman said. The NFA is considering bumping up the minimal capital requirements to provide more protection to customers, but Dykeman urged investors to do their homework on forex trading companies before placing any investments. The NFA official said he could recall other instances of retail firms not meeting net capital requirements for a few days - the NFA performs weekly checks - but he said: "This is the first major case of a company being seriously undercapitalized" over an extended period of time. The NFA had ordered Forefront to liquidate all its open positions by March 21. On the Web: http://www.cfgtrader.com http://www.cftc.gov http://www.nfa.futures.org

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