With all the 1:10 Leverage turmoil happening lately we shouldn't forget that NFA/CFTC are the only retail Forex watchdogs in the US. From time to time the agencies perform well in uncovering forex frauds and in shutting down problematic businesses.
A few days ago NFA cracked on quite a few CTAs which lost millions of clients dollars and did all they could in order to hide these losses. If not the NFA these practices might have continued further and many more clients could have lost their money. I suggest forex traders and potential forex investors (and fraud victims) read the NFA's documents in order to see how some investors were bilked for their money before handing their funds to any CTA.
Each case has different background but it's an interesting read nonetheless.
CFS Capital:
On June 30, 2009, NFA issued a Complaint charging CFS, Andrew Elrod and Brian Elrod with misuse of customer funds; willfully submitting false or misleading information to NFA; and failing to diligently supervise. The Complaint also charged CFS and Brian Elrod with using fraudulent and misleading promotional material. Finally, the Complaint charged CFS with failing to follow the terms of the disclosure document and management agreement.
DECISION:
On February 3, 2010, CFS was ordered to withdraw from NFA membership and not reapply for NFA membership or act as a principal of an NFA Member. Andrew Elrod was ordered to withdraw from NFA membership and associate membership and not reapply for NFA membership, associate membership, or act as a principal of an NFA Member. Brian Elrod was ordered to withdraw from NFA membership and associate membership and not reapply for NFA membership, associate membership or act as a principal of an NFA Member for five years. During the five-year period, Brian Elrod was ordered not to act in any capacity requiring registration, nor act as a principal of an NFA Member. If after expiration of the five-year period, Brian Elrod again becomes an NFA Member or Associate, or a principal of an NFA Member, he was ordered to pay a $30,000 fine, payable 30 days after he is granted NFA membership or associate membership or becomes a principal of an NFA Member.
Capital FX LLC:
On December 9, 2009, NFA issued a Complaint charging CFX and Pecord with providing false or misleading information to NFA and failure to cooperate in an NFA investigation. The Complaint also charged CFX with using an inaccurate or incomplete disclosure document and cheating, defrauding or deceiving another person or attempting to do so.
DECISION:
On February 3, 2010, CFX was ordered to withdraw its NFA membership and not apply for NFA membership or principal status with any NFA Member at any time in the future. Pecord was ordered to withdraw his NFA membership and principal status with an NFA Member and not apply for NFA membership, associate NFA membership or principal status with any NFA Member at any time in the future.
ACJ Capital:
On November 17, 2009, NFA issued a Complaint charging ACJ and Collazo with providing false information to customers about the performance of their accounts; and providing customers with fictitious account statements that showed significant equity in their accounts when, in fact, most, if not all, of their equity had been lost. The Complaint also charged Collazo with failing to observe high standards of commercial honor and just and equitable principles of trade.
DECISION:
On February 3, 2010, ACJ was permanently barred from NFA membership and from acting as a principal of an NFA Member. Collazo was permanently barred from NFA membership and associate membership and from acting as a principal of an NFA Member.
With all the 1:10 Leverage turmoil happening lately we shouldn't forget that NFA/CFTC are the only retail Forex watchdogs in the US. From time to time the agencies perform well in uncovering forex frauds and in shutting down problematic businesses.
A few days ago NFA cracked on quite a few CTAs which lost millions of clients dollars and did all they could in order to hide these losses. If not the NFA these practices might have continued further and many more clients could have lost their money. I suggest forex traders and potential forex investors (and fraud victims) read the NFA's documents in order to see how some investors were bilked for their money before handing their funds to any CTA.
Each case has different background but it's an interesting read nonetheless.
CFS Capital:
On June 30, 2009, NFA issued a Complaint charging CFS, Andrew Elrod and Brian Elrod with misuse of customer funds; willfully submitting false or misleading information to NFA; and failing to diligently supervise. The Complaint also charged CFS and Brian Elrod with using fraudulent and misleading promotional material. Finally, the Complaint charged CFS with failing to follow the terms of the disclosure document and management agreement.
DECISION:
On February 3, 2010, CFS was ordered to withdraw from NFA membership and not reapply for NFA membership or act as a principal of an NFA Member. Andrew Elrod was ordered to withdraw from NFA membership and associate membership and not reapply for NFA membership, associate membership, or act as a principal of an NFA Member. Brian Elrod was ordered to withdraw from NFA membership and associate membership and not reapply for NFA membership, associate membership or act as a principal of an NFA Member for five years. During the five-year period, Brian Elrod was ordered not to act in any capacity requiring registration, nor act as a principal of an NFA Member. If after expiration of the five-year period, Brian Elrod again becomes an NFA Member or Associate, or a principal of an NFA Member, he was ordered to pay a $30,000 fine, payable 30 days after he is granted NFA membership or associate membership or becomes a principal of an NFA Member.
Capital FX LLC:
On December 9, 2009, NFA issued a Complaint charging CFX and Pecord with providing false or misleading information to NFA and failure to cooperate in an NFA investigation. The Complaint also charged CFX with using an inaccurate or incomplete disclosure document and cheating, defrauding or deceiving another person or attempting to do so.
DECISION:
On February 3, 2010, CFX was ordered to withdraw its NFA membership and not apply for NFA membership or principal status with any NFA Member at any time in the future. Pecord was ordered to withdraw his NFA membership and principal status with an NFA Member and not apply for NFA membership, associate NFA membership or principal status with any NFA Member at any time in the future.
ACJ Capital:
On November 17, 2009, NFA issued a Complaint charging ACJ and Collazo with providing false information to customers about the performance of their accounts; and providing customers with fictitious account statements that showed significant equity in their accounts when, in fact, most, if not all, of their equity had been lost. The Complaint also charged Collazo with failing to observe high standards of commercial honor and just and equitable principles of trade.
DECISION:
On February 3, 2010, ACJ was permanently barred from NFA membership and from acting as a principal of an NFA Member. Collazo was permanently barred from NFA membership and associate membership and from acting as a principal of an NFA Member.
