NFA Charged Introducing Broker FX Evolve for Offering Services to Traders with Criminal Past

The American National Futures Association (NFA) issued a complaint charging FX Evolve, an introducing broker (IB) from North Carolina, and its principal, Jason Hoerr, with failing to observe high standards and failing to supervise. The watchdog also charged FX Evolve with doing business with non-NFA Members, that were required to be registered, and failing to implement an adequate Anti Money Laundering (AML) program.

As of February 2014, FX Evolve had 100 active accounts, all of which exclusively

traded Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term according to the NFA. FX Evolve introduced its customers' accounts to several NFA regulated brokers and their foreign Affiliates Affiliates Affiliates serve as an essential component of a broker’s client acquisition tactics and marketing. One of the most important functions of affiliate marketers is the sending of leads to the broker, which are directly opening an account or visiting the broker’s website. There are several ways in which brokers compensate affiliates based on the number and type of clients they refer to the company and whether or not or how much they end up depositing.Understanding CPA or Cost Per Acquisition The bro Affiliates serve as an essential component of a broker’s client acquisition tactics and marketing. One of the most important functions of affiliate marketers is the sending of leads to the broker, which are directly opening an account or visiting the broker’s website. There are several ways in which brokers compensate affiliates based on the number and type of clients they refer to the company and whether or not or how much they end up depositing.Understanding CPA or Cost Per Acquisition The bro Read this Term, including Institutional Liquidity LLC (ILQ), a former member of the NFA that it had already chased out of the US market.

The NFA says FX Evolve did business with GNS Capital and Alpha Equities and Futures, which the watchdog considers as requiring registration as IBs and forex firms with the NFA, but were not registered as such. FX Evolve had marketing agreements with these educational services providers who allegedly solicited US clients for it and, in return, received a portion of the revenues generated. Hoerr admitted that he eventually learned that FX Evolve's arrangements with GNS and AEF did not comply with NFA rules and required personnel at GNS and AEF to register as managers of FX Evolve.

AML Failure

Three of FX Evolve's clients, Wilma Minger, Linda Felberand and DAS Funding Group

owned by Dominic Schender, had the highest trading volume of any of ILQ's accounts. Minger also appeared to have an interest in another account TFG FX LLC, wherein individuals named Craig Linch and Stephen Kirkland were managing members. Kirkland was named in a 2013 Securities and Exchange commission (SEC) enforcement action in which he was charged with making false and misleading statements to investors. Minger's son, Steve Minger, was the contact for the TFG account. In 2005, Steve Minger pleaded guilty to bank fraud, conspiracy and income tax evasion.

According to the NFA, Hoerr was aware of the criminal case against Steve Minger, knew that he had pled guilty to engaging in criminal activity and went to jail. Hoerr claimed to be unaware of the SEC case against Kirkland, although Hoerr admittedly knew Kirkland very well.

The NFA suspects that Kirkland and/or Steve Minger placed trades for the accounts of Wilma Minger, Felber and DAS Funding Group without being registered, having any financial interest in those accounts or having authority to place trades for them. This situation was facilitated by FX Evolve and Hoerr who provided Kirkland and Steve Minger with login information for an ILQ master account, thus enabling them to place trades in that account.

The NFA says that in connection with this case it may impose a number of penalties including suspension from membership and a monetary fine not to exceed $250,000 for each violation.