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The Mainstream Media is starting to pick up on the Tradex Swiss AG debacle that I have been covering the last few weeks. Let this be a warning to anyone trading with an unregulated Swiss Firm what can potentially happen to you.

The Following Swiss Forex Brokers are unregulated just like Tradex Swiss AG
WestCapFX
ACM
MIG
DukasCopy
GFX Group (Forex.CH)
Crown Forex

Currency Trading Firm at Center of Controversy
Currency trading firm at center of controversy - Top Stories - MSNBC.com

A Swiss-owned currency trading shop that was operating out of downtown Boston had its assets frozen by investigators from its home country and also is being investigated by Massachusetts authorities, according to court documents and multiple sources.

Tradex Group LLC was managing at least $5 million for its clients, some of whom have gone to court in a bid to prevent any transfer of funds out of a Bank of America account based in a Boston branch.

Tradex faces problems on both sides of the Atlantic.

While the scope of the Massachusetts investigation is unclear, it is clear from public documents that the operation was running without having registered with the state, according to a spokesman for Secretary of State William F. Galvin.

While failing to register as a securities business, Tradex did file articles of incorporation with the state in 2004. Also in the U.S., the National Futures Association, whose members trade futures including foreign currency, banned Tradex from taking part in trading on behalf of American clients in January.

The NFA alleged in a complaint posted on the group's Web site that Tradex erred by soliciting investments for its Swiss parent company, which was not registered to do business on behalf of U.S. clients.

Additionally, the Swiss Federal Banking Commission, which froze Tradex's assets in July, attributed the action to "licensing issues," according to people close to the situation. Representatives of the association declined to comment for this story.

But court filings by other parties indicate that Tradex's parent and a sister company were not properly registered in Europe.

Officials at Tradex's parent have been quick to distance themselves from the matter. In an e-mail to the Boston Business Journal, Tradex Swiss AG CEO Nicolaas Jansen van Rensburg said the Boston group's problems rest solely on the shoulders of its local employees.

"I wish to point out that Tradex Group LLC is not our company. Tradex Swiss AG was a shareholder in the company," wrote van Rensburg. "Tradex Swiss AG was NOT involved in the running of the business."

Meanwhile, the legal fight over the status of the frozen $5 million is underway.

The former manager of the Boston office, Craig Karlis of Hopkinton, and three investors filed suit last month trying to block any transfer of the money. Karlis said he's owed unspecified back wages.

"Craig Karlis and the other employees took it upon themselves to hire an attorney in an attempt to ensure that their clients' money is protected throughout the Swiss investigation," said Liam Floyd, the attorney representing Karlis and investor George Popescu.

Joshua Cook, attorney for Wei Zheng and Pei Zhen Xin, the other investors involved in the suit, said his clients deposited $200,000 into the account after it was frozen by the Swiss investigators.
He added that he has received inquiries from about another 100 concerned investors.

Cook said his clients sued out of fear that their money will be used to satisfy other creditors' claims.

Cook alleged that many currency traders "fail to adequately disclose the risks" associated with their businesses, but he did not link the broad statement to his clients' case.

A Tradex officer said in an affidavit that "the trading agreements make clear (that) commodities investments are highly risky and highly speculative."

According to court filings, the Swiss investigators argued it was necessary to freeze the Bank of America account to ensure that Tradex's assets are not improperly disbursed. The Swiss regulators said they plan to pay employees back wages once the investigation is complete.

Attorney Evan Fray-Witzer, who is representing the Swiss investigators and Tradex Swiss, did not return calls seeking comment.

On Aug. 16, Judge Alan van Gestel of the business litigation session in Suffolk Superior Court ruled that as the proceedings continue, the Swiss authorities can access all but $500,000 of the money in the now-frozen Bank of America account.

Members of secretary Galvin's staff declined to say what the next step for his office will be.

A spokeswoman from the National Futures Association said any allegations of illegal futures trading would be referred to the U.S. Commodity Futures Trading Commission for investigation.

The commission neither confirms nor denies the existence of investigations on specific firms, agency spokesman Dennis Holden said. He did say the agency has been working to warn potential investors about the dangers of foreign currency futures trading, or "forex," in general.

I hate to say I told you so, but, I told you so. Nations LLC has posted on their website that they are officially bankrupt and that “it does not appear likely that there will be sufficient funds to pay all claims of creditors and customers in full.” This is precisely what I have been warning about. When you trade with a poorly capitalized firm you are at much greater risk of losing your money because in the forex industry poorly capitalized firms have a terrible track record (this year alone over a dozen have gone out of business.) This is precisely why the NFA has raised capital requirements to $5 million. And as with One World Capital I put out a warning on Nations well before they started taking customer funds hostage.

Here is what I said on July 19, 2007:

Then on July 24, 2007 the NFA closed Nations:

On September 6, 2007 the CFTC then Dropped the Hammer on Nations:

This week this statement appeared on Nations Website
Nations Investments

Real people have lost real money, not because they took trading losses but because they invested their money in a firm that was poorly capitalized. Don’t make the same mistake they did. Don’t trade with a poorly capitalized firm.

The National Futures Association appears to be chucking a couple final spears into the bloated carcasses of two former dead pool brokers (Trend Commodities Limited Partnership and the Bacera Corporation.)

Trend Commodities has been permanently shut down and banned from NFA membership (BASIC Case Summary) while the Bacera Corporation was fined $50,000.

Of interest in the Bacera case was this statement, "The Committee found that Bacera failed to maintain required adjusted net capital, failed to give required notice of being below its minimum net capital requirement, and failed to take required capital charges and maintain accurate records." (National Futures Association | News Center)

Again, it's all about capitalization. Firms that have adequate capital don't run into these kinds of problems. Firms that are poorly capitalized continually run into these kinds of problems and often times go out of business, in some cases taking customers down to the bottom of the ocean with them. It's that simple.

does E FX Options ($3,342,000) = EFX Group - FOREX Trading ??

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~~Keep The Faith~~

I think so.. I think they are an IB for MBTrading.com but I'm not certain.

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www.forexpm.com - Free strategies and Ebooks

sound funny that their fund is larger than their clearing firm

__________________
~~Keep The Faith~~

Closure for RefcoFX

At last the customers of RefcoFX are getting their money back. Reports coming in over the wires indicate that customers are getting back roughly 40 cents on the dollar of their original investment. While that's still a very heavy loss to take at least the customers are getting something after two years of watching creditors loot their accounts. Phil Bennett and the rest of the board at Refco should know that there are some rather toasty seats in hell waiting for them upon their arrival.

The end of the RefcoFX nightmare brings with it a clear lesson to always trade with a regulated firm. If a firm isn't licensed, then stay away from it. Far, far away from it. And also be sure the firm you are trading with is well capitalized. The case of Nations, which was an undercapitalized broker on the dead pool is further evidence of that. And sadly enough, now Nations begins the journey that RefcoFX just ended.

A big loss... but better than nothing I guess.. I totally agree with you on regulation.. I prefer UK Regulated brokers, rather than the US..

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www.forexpm.com - Free strategies and Ebooks

Well, Tradex Swiss AG isn't the only Swiss Broker out there swindling customers of their money. The CFTC just busted another Swiss firm by the name of INH-Interholding SA and its principal Joerg Heierle. The Story is below. As a reminder the following Swiss firms ARE NOT REGULATED and should be avoided:

Unregulated Swiss Brokers
WestCapFX
ACM
MIG
DukasCopy
GFX Group (Forex.CH)
Crown Forex

Florida Federal Court Issues Order Freezing Assets of Miami Beach Resident Joerg Heierle and Swiss Corporation INH-Interholding SA

CFTC Charges Heierle and INH with Fraudulent Solicitation of at Least $4.4 Million to Trade Commodity Futures and Options and Concealment of Trading Losses

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced today that a federal court in Miami entered an order freezing assets under the control of, and prohibiting the destruction of documents by, defendants Joerg Heierle, of Miami Beach, Florida, and INH-Interholding SA (INH), of Switzerland and Miami Beach, Florida.

The order arises out a complaint filed by the CFTC on September 12, 2007, in the United States District Court for the Southern District of Florida, charging defendants with fraudulently soliciting at least $4.4 million in a commodity futures and options pool fraud scheme. The complaint also charges Heierle and INH with concealing trading losses by issuing false statements to pool participants regarding the profitability of their INH investments. The CFTC also names Futures Trading Academy, Inc., of Bay Harbour, Florida, as a relief defendant due to its alleged receipt of pool participants’ funds.

According to the complaint, Heierle disappeared in April 2007, and pool participants have not been able to access their funds since that time.

The CFTC complaint specifically alleges that, since at least October 2001 through April 2007, Heierle and INH solicited pool participants located throughout the United States and abroad to invest in an INH commodity futures and options pool that Heierle would operate and manage on their behalf. In their solicitations, defendants falsely represented that the INH commodity pools were historically profitable and that Heierle was a successful trader. For example, the INH website (www.interholding.net) claimed that the three INH pools realized returns of 12.1 percent, 17.3 percent and 30.2 percent in 2005.

However, as alleged, there are no trading accounts in the name of INH, and the known trading accounts controlled by Heierle sustained losses during that time period totaling $80,000. Moreover, during the relevant time period, the known trading accounts controlled by Heierle allegedly sustained overall net trading losses of approximately $1,000,000.

The complaint also alleges that defendants issued false account statements to pool participants reflecting that defendants were profitably trading on their behalf. For example, for the period between July 2006 and April 2007, despite having sustained net trading losses of approximately $1.2 million, pool participants’ account summaries reflected returns of up to 10 percent.