JadeFX Lesson

Well it appears that the US Regulators have long arms.

I am NOT a US citizen and I decided to go with JadeFX who was touted as NOT being regulated by the US. Now, JadeFX has been a great broker, great speed, no requotes, awesome spread etc. No complaints at all.

But somehow the USA reached in and touched them. Their liquidity provider is a US Bank and their tech support is in the US. They do not have any US clients or so they say and I believe them.

Here is the message from today from JadeFX. My point is not about JadeFX as much as it is about:

1. Ensure that you have true segregation of funds.
2. Ensure that you truly know how your broker is/is not regulated.
3. First sign of trouble move the majority of your funds immediately. keep some in so the account is left open and you can come back if you wish.
4. Never have just one broker.
5. This is a sign of things to come.

_________________________________________________________________

We would like to update all our JadeFX Ltd club members on situation or isssue we have at hand. After today's meetings , there are several options that might occur.

Currently due to this intensive inquiry we can not process any funds because no access is allowed & will not be allowed until some resolution is found. We want to make sure that all our members understand the great challenges we are facing

What Options might be available for JadeFX Ltd club members:

1. bankruptcy -- if they prolong the inquiry to several weeks or months. This implies that we might be able to recover part of the funds

2. Complete aggresssive shutdown due to severe penalties and prolonging the inquiry-- this implies their will be some violations and we might be able to wind down and recover part of the funds.

3. Warning issued for any violations found and severe penalties applied ---this implies there will be a possibility to recover ALL or part of the funds.

NOTE: The situation right now is very fluid or very unpredictable , anyone who has dealt with the regulators understands how tough and unforgiving the outcome can be. We hope for the best and we are doing everything possible to have a positive outcome but we can not predict or know what will happen or how long it will take ( Days or Weeks ) , since they move very slowly

The regulators are coming down very hard on any brokerage regulated or unregulated or based in US or not Based in US , it does not matter. So long as you are dealing with any US bank for liquidity then you are in their crosshair.

we will also take down the website due to the ongoing inquiry for the time being and will turn it back up, once a resolution is reached. This is due to some changes required to meet certain non-solicitation clauses and various pieces of information required to be placed on the website.

For any communication while we are working on the issue please use only the email

Thank you and let's hope for the best

JadeFX
http://www.jadefx.com

This is obviously a dire situation, firstly for any JadeFX members, but also potentially for other brokerages built on a similar model.

But some things don't add up. The email sent to members is very alarmist and void of any real information, other than pushing things almost completely on the big bad CFTC, while explaining none of the details behind what the problems may be. It's hard for any of us to speculate beyond here, but my vague recollections of the JadeFX site (still available on google cache) was that it was non-solicitory in nature. But, the warnings of not accepting US customers and warnings of explicit potential for losses were certainly put on there and beefed up as part of the now many months "campaign" by the CFTC and others towards the fx industry.

One of the first 'hits' towards the industry was the CFTC's Jan 18 Suing of 14 Firms. And while infraction reasons are listed for those 14, it's difficult for us to know what their issue with JadeFX may be. This could be another round or tier of what the CFTC is after.

But again, no details are given by JadeFX. And yet, they've taken down their web site, and indicated it will be down through the investigation, throwing out bankruptcy as a possibility. In contrast, most (all?) of the 14 above still have their web sites up, some in what looks like the same format/content as they had always been. Why is JadeFX's down and the others not?

Assuming account segregation was in place, and the monies were on deposit with the liquidity provider, it's difficult to comprehend why bankruptcy is being so touted.

I won't nit-pick their communication email, but it is horridly written, again void of any information - unusual for a company that (I think) has played up full disclosure and honesty previously. And to end it with "let's hope for the best" - hope is absolutely not a business plan nor should it be part of correspondence like this, and frankly after that type of a communication, inspires nothing.

Something just doesn't add up.

They either had US clients or a US presence (US owners, etc). Definitely one of the two, or both.

Not difficult to comprehend at all. They clearly want to use client deposits to pay their legal bills, or simply run off with the cash altogether.

This should be a warning to anyone considering trading with a shady broker.

"Based in Belize" eh?

 

1. Location Wisconsin Dells, WI, USA

http://twitter.com/jadefx

JADEFX ( JADE INVESTMENTS GROUP , LLC)

115 Forest Drive , Suite 1007

Wisconsin Dells, WI , 53965

USA

Telephone: 1-608-253-0282

Surprise, your tight spread Belize-based "broker" is a guy living out of his condo in Wisconsin.

Appears he's upgraded to finer accommodations down the street from the Days Inn and next to Aunt Jenny's Got It All Shop.

Jade Investments Group LLC
1009 Stand Rock Road
Wisconsin Dells, WI 53965-9205
(608) 253-0020

Link

That's an up-to-date address and contact number per Google's white pages.

If you're going to stop by and demand your money back, check out the Timber Falls Adventure Park down the street, the roller coaster looks fun. Similar thrill & excitement, but no risk of losing your entire trading account.

LOL... these f*cker is making up a reason and trying to run away with all client's deposit, my prediction that thecollectivefx will be next..

It's likely the CFTC has thought that far ahead and frozen all of their accounts.

I would advise all JadeFX clients to call the CFTC and get the real story, not rely on the made-up BS that the JadeFX owner is spewing.

Their beef seems to be just with Boston Technologies. Looks like they went into hibernation, it was only a matter of time until the CFTC came knocking on their unregistered operation.

I am a live client of JadeFX and received absolutely no contact from them at all. It seems like Jade is acting very suspect already so the best prospect is indeed if CFTC have frozen all client funds to NOT allow Jade to use it while going 'bankrupt'. Amazing how easy it is for these 'scams' to transpire...

I sent an email to CFTC... what a disaster for paying clients who did nothing wrong.

If you're a live client, why is freezing accounts and not having access to your funds and trading seemingly the best option? The two don't seem to go hand in hand, unless I suppose one has a few dollars on deposit, which, isn't a real trading account anyways.

Was their feed and MT4 status operational on Friday?

If one had a stake in Jade, I would recommend calling the CFTC, not emailing.

Yes, as to the Belize location...prior to the CFTC rule changes they were a US based broker.

once all the changes started coming about they decided to move away from the US. At the time it seemed like a logical business decision. They informed all the US clients that they had to close their accounts by a certain date as well as performing other items to stay in compliance.

From that, it certainly appeared as if they had physically moved, all US clients were gone and they had actually changed liquidity providers also as a result. Their tech support through Boston Tech was the only US connection according to them.

Do I necessarily agree with some of the dire comments made here...No I don't. HOWEVER, my job is to protect my interests (and money) so to that extent I will be calling CFTC on Monday.

Do I believe that JadeFX has done a terrible job informing their clients. Yes I do. I interpret that email as a setup for impending disastrous news much like priming the pump.

Was looking for something else, and this came around, again. It's amazing what you can find through google.

But of course, the really sad part is the irony in this, and the e-mail sent out to customers.

My understanding that if CFTC froze the accounts then at least JadeFX can't access and funnel their clients money out claiming they had to pay for legal or running fee's while under investigation. It just seems so transparent that this could be happening right now. I was always under the impression the accounts were segregated. I'm only getting the answering machine at CFTC... will contact them by phone on monday. I noticed feed stopped friday.

@Beljevina,

Yes I realize that the funds are segregated. It was one of the criteria that I used when i selected them as a broker. While that gives comfort it may not necessarily help in terms of timing.

I just looked at some previous CFTC FX cases and it can take 6 months for the funds to flow.

I completed paperwork with two other brokers on Thursday/Friday and hopefully will have another account up and running next week.

Found on another forum, as a email response to a concerned customer, sent either Thursday or Friday. Apparently MT4 and connectivity was indeed down.

It states the tech support office that they contract was visited by the CFTC ... but it is implied that the CFTC visited their Belize operation? US officials flying to and investigating in Belize? Nope, that won't happen. And, meetings in EST happen, well, in the physical EST time zone. Hence, there must be a physical stateside component to their operation.

Interesting to note that in another forum, a live user reports being called by the CFTC and asked about his experiences with Jade.

I would like to take this opportunity to apologize and explain why our liquidity Bank in US went offline today from Belize.

The Technical Support office that we contract was visited today with CFTC regulators in order to verify if it serviced any US clients or violated any CFTC regulations . JadeFX Ltd ( Belize ) is based in Belize and does not Service any US Clients or members. We are currently working with regulators to resolve those differences. We ask all our members to be patient while we work hard to resolve the differences. We have meetings with the regulators on friday from 9:00 to 12:00 AM Eastern Standard Time. Once everything is resolved , we will inform all our members immedaitely after that meeting.

It was extremely hard on all our members and the Technical support Office contracted to offer technical Support because the technical team did not have access to the MT4 Trading platform system to send out an Email to all our members and i do apologize for the inconvenience. Once this is resolved we will make sure, that we deal with all the issues that will arise because of this.

JadeFX - http://www.jadefx.com - [email protected]

@Beljevina,

The original post that i started with IS the message after their Friday meeting. So at first, things did not seem too bad as it appeared to be a contracted Tech Support verification issue.

Then after the meeting they sent out my earlier email.

That was why in my 5 recommendations I had number 3.. First sign of trouble move the majority of your funds immediately. keep some in so the account is left open and you can come back if you wish.

That was the time to move the funds out so they are not frozen during the investigation.

Hey Guys,

I've got a live account at JadeFX too, with all of my funds...
I've sent an email to CTFC a few hours ago, when they answer I'll post it here.

My other problem is that I have 4 open trades, what's happening with them now? I think about swaps on the one hand, what's more I use NanningBob's 4H method, without stop losses...

All the best to us,
Greg

The home address of JadeFX owner "Jacob" has been confirmed by the Wisconsin Department of Financial Institutions:

Link (site offline for maintenance, here's a screenshot)

According to another forum thread, his corporate bank account is at Wells Fargo, San Francisco. Most client deposits are likely there. The amount he leaves at his prime broker (presumably either Citi or BT Prime) is only what he needs to cover outstanding client exposure.

Ha. What Belize operation? He's just using a shell address there, along with a $25k rubber-stamp "regulation certificate" from the IFSC. All likely from the shady, terrible advice of BT..


in other news..

"Guys Jade is legitimately in trouble with the CFTC. A Federal Attorney with the CFTC called me and interviewed me about my experience at Jade when I was with them (in 2009). I am a US citizen, and I know of at least one other US citizen that got the phone call as well for an interview."

This situation suggests that any offshore broker who uses US bank liquidity or who uses a server located in the US or who deposits client funds in a US bank or who has support staff in the US might be fair game for the CFTC. Many of the current offshore brokers who still accept US citizens are doing one or more of the above.