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 according to the NFA. FX Evolve introduced its customers' accounts to several NFA regulated brokers and their foreign Affiliates , 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.
