Dustin Pass's Managed account Scam

Definitely contact the NFA and see if you can find anyone there who knows what's going on.

Contact IBFX and see what they say about Dustin's suspension. If he was barred from trading weeks ago and failed to mention this little detail to clients, that sounds suspiciously like gross negligence. If he just found out a day or two ago that he's getting suspended as of today, then we're back to mere incompetence. Somehow, I doubt IBFX only gave their account managers a couple of days to get registered or quit.

It might be time to think about looking for a lawyer who specializes in this sort of case. The drawback is that you may end up owing legal fees and there's no guarantee of recovering any funds.
 
I learned a hard lesson this time - expensive lesson.

I closed my account out. I ended up losing 70% of my account. If I did not close it out, I could have lost the whole thing.
 
Brutal.

Now that the damage is done, you might want to go ahead and complain to the NFA. I don't know if it will do any good, but it certainly can't hurt.
 
One more

Hi

Similar story here, I have been trading news with Dustin for about 8 month and actually had a good impression of him. I stopped newstrading and opened a managed account with InterbankFX in August 2007. I started with $11000 and right now we have a Balance of $17650 and Equity of $4600

Now yesterday at the same time I have received the two mails (see text below) from IBFX and from Dustin Pass. It looks like for some reason they don't get along anymore and just let their customers hang in the deep red accounts.

Can they really legally do that or is there anything I can do about this mess?

Hope you can help me in this matter. Thanks.


Ernst



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Following mails from IBFX and Dustin Pass and current Account Statement
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Dear IBFX Client,


You are receiving this email because you have executed a Limited Power of Attorney (LPOA) authorizing Dustin Pass to trade spot foreign exchange in your account. As you may be aware Dustin Pass and Interbank FX have discontinued their Introducing Advisor and Money Manager relationships. Due to this action we are no longer accepting deposits into your account and you need to prepare to close open positions in your account. We wish to remind you that, in accordance with the terms of the LPOA that you have executed, you have instructed Interbank FX to execute all trades directed by Dustin Pass for your account and, further, you have agreed that Interbank FX will not be liable for any losses that you may incur as a result of Interbank FX following such instructions. Interbank FX has contacted Dustin Pass and given instructions to close open positions, for accounts which he manages, at the best opportunity within the next 5 business days (by 7/10/08). Any open positions that remain after 7/10/08 will not be managed and may be closed at Interbank FX discretion.


We encourage you to evaluate your account and review your options at this time. Dustin Pass does continue to retain the right to trade your account, until you send in the revocation of LPOA form, or Interbank FX takes action to close your trades and remove funds to a new account. Therefore if you don’t revoke your LPOA immediately, contact Dustin Pass to determine if he plans to continue to monitor your open positions and to close them at the best opportunity before 7/10/08.

After review of your account you need to make one of three choices.


1. You can revoke your LPOA by sending in the attached Revocation of Limited power of Attorney Form. This will close all open positions on your account within one business day at current market. Your current account will be closed and funds will be transferred into a new account.

2. You can move current open positions to a new account and self direct or manage the account with your current open positions. If you would like to exercise this option we would need you to send in the attached Managed Account Transfer Form as well as contact Dustin Pass to inform him not to close your current open positions. If you would like to exercise this option we must receive the Managed Account Transfer Form

before 7/8/08. The transfer will take place within 48 hours and you will be emailed new login information to allow you to self manage your account. If for some reason you have concerns over your accounts open positions before the transfer date takes place you would need to exercise option number one above.

3. If you don’t exercise any of the above options you desire your account to continue to be managed by Dustin Pass and allow him to close your open positions before 7/10/08. Any open positions that remain after 7/10/08 will not be managed and may be closed at Interbank FX discretion.


If you have questions concerning the options discussed in this email please call customer service at 1-866-468-3739 and we would be glad to help. Any questions concerning Dustin Pass and trading activity in your account would need to be directed to Dustin Pass.

Regards,

Dale Brown

Institutional Sales Manager

Direct: 801-930-6800, ext 6807
Toll Free: 866-468-3739, ext 6807
Fax: 1-212-884-0609
dale.brown@ibfx.com


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Dear InterbankFX Managed Account Client:



InterbankFX has recently created new policies that required all their Introducing Brokers (IB) to be registered by the 30th of June. We are currently registered as a CTA and are pending registration as an IB. The NFA has given a deadline of September 19 which we will easily meet. InterbankFX has, in its sole discretion, chosen to terminate its agreement with Traders Network which includes the management of your funds. As you know several months ago there were some account allocation issues which lead to margin calls on several accounts. These issues were not resolved by InterbankFX. Because of this I no longer felt comfortable sending new business to them and have been working to move all existing business elsewhere.


To make a long story short I have not sent them business in around 6 months, however, they are still required to pay me on the prior business that I sent unless the contract between IBFX and Traders Network is breached. They have conveniently created new policy as well as interpreted existing policy in a way that allows them to terminate me as an IB and release them from their responsibility to continue to pay me on old business.

InterbankFX is carrying this out without consideration of the affect it will have on existing managed clients. In fact originally they were going to liquidate all positions and the clients were going to have to take the losses. I have since convinced them to give the client the option to take over management of the trades or have them liquidated. This was only after several attempts to convince them to allow me to continue managing the accounts for free until we could manage out of the existing trades however they have denied this request as well. It is obvious that they do not have the client’s best interest in mind.


You should expect to receive an email from InterbankFX in the near future that will let you know your options and what will need to be done in order to exercise the different options. If you would like me to continue to manage your account you can transfer the balance to FXCM and it will be managed utilizing the Bank Flow system. No performance fee will be charged until your initial investment has been recouped.

I will have control of the account through July 11th after which you will need to self manage or close your account down.

Regards,

Dustin Pass
Traders Network


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Interbank FX, LLC
A/C No: xxxxxx Name: xxxxx xxxxx Group: 4xmaker_sub 2008 July 3, 20:59
Closed Transactions:
Ticket Open Time Type Lots Item Price S / L T / P Close Time Price Commission R/O Swap Trade P/L
5385528 2008/07/02 13:05 sell 0.04 eurusd 1.5861 0.0000 0.0000 2008/07/03 11:36 1.5906 0.00 -0.94 -18.00
0.00 -0.94 -18.00
Deposit/Withdrawal: 0.00 Credit Facility: 0.00 Closed Trade P/L: -18.94

Open Trades:
Ticket Open Time Type Lots Item Price S / L T / P Price Commission R/O Swap Trade P/L
4882850 2007/10/23 14:18 sell 0.14 eurusd 1.4273 0.0000 0.0000 1.5705 -1.40 -94.49 -2004.80
4890312 2007/10/26 13:48 sell 0.08 eurusd 1.4371 0.0000 0.0000 1.5705 -0.80 -55.11 -1067.20
5031618 2007/12/27 14:09 buy 0.07 usdchf 1.1434 0.0000 0.0000 1.0262 -0.61 44.06 -799.46
5032025 2007/12/27 17:31 sell 0.06 eurusd 1.4623 0.0000 0.0000 1.5705 -0.60 -49.99 -649.20
5032063 2007/12/27 17:31 buy 0.07 usdchf 1.1387 0.0000 0.0000 1.0262 -0.61 44.06 -767.40
5033353 2007/12/28 12:55 buy 0.03 usdchf 1.1302 0.0000 0.0000 1.0262 -0.27 18.66 -304.04
5036791 2008/01/02 12:46 buy 0.04 usdchf 1.1262 0.0000 0.0000 1.0262 -0.36 23.98 -389.79
5037710 2008/01/02 16:26 buy 0.04 usdchf 1.1181 0.0000 0.0000 1.0262 -0.36 23.98 -358.22
5043565 2008/01/07 02:18 buy 0.02 usdchf 1.1095 0.0000 0.0000 1.0262 -0.18 11.25 -162.35
5051293 2008/01/10 12:42 buy 0.02 usdchf 1.1126 0.0000 0.0000 1.0262 -0.18 10.50 -168.39
5064538 2008/01/16 14:20 buy 0.03 usdchf 1.0912 0.0000 0.0000 1.0262 -0.27 14.86 -190.03
5064615 2008/01/16 14:25 buy 0.02 usdchf 1.0904 0.0000 0.0000 1.0262 -0.18 9.91 -125.13
5087834 2008/01/24 14:40 sell 0.04 audusd 0.8779 0.0000 0.0000 0.9605 -0.40 -72.15 -330.40
5088880 2008/01/24 19:42 sell 0.03 audusd 0.8799 0.0000 0.0000 0.9605 -0.30 -54.11 -241.80
5088929 2008/01/24 19:43 sell 0.04 eurusd 1.4759 0.0000 0.0000 1.5705 -0.40 -33.72 -378.40
5089101 2008/01/24 21:06 sell 0.03 audusd 0.8814 0.0000 0.0000 0.9605 -0.30 -54.11 -237.30
5100178 2008/01/30 19:21 sell 0.01 eurusd 1.4858 0.0000 0.0000 1.5705 -0.10 -8.44 -84.70
5217169 2008/03/24 15:10 sell 0.11 audusd 0.9058 0.0000 0.0000 0.9605 -1.10 -142.34 -601.70
5327684 2008/02/25 19:32 sell 0.21 audusd 0.9253 0.0000 0.0000 0.9605 -2.10 -336.31 -739.20
5328669 2008/05/21 22:33 buy 0.01 usdchf 1.0869 0.0000 0.0000 1.0262 -0.10 0.64 -59.16
5328710 2008/05/21 22:42 sell 0.03 eurusd 1.4718 0.0000 0.0000 1.5705 -0.30 -9.89 -296.10
5328743 2008/05/21 22:42 sell 0.15 audusd 0.9080 0.0000 0.0000 0.9605 -1.50 -88.20 -787.50
5328794 2008/05/21 22:42 sell 0.32 audusd 0.9254 0.0000 0.0000 0.9605 -3.20 -188.16 -1123.20
5328836 2008/05/21 22:43 buy 0.01 usdchf 1.0836 0.0000 0.0000 1.0262 -0.10 0.64 -55.94
5328872 2008/05/21 22:43 sell 0.01 audusd 0.8990 0.0000 0.0000 0.9605 -0.10 -5.88 -61.50
5328920 2008/05/21 22:43 sell 0.01 audusd 0.9253 0.0000 0.0000 0.9605 -0.10 -5.88 -35.20
-15.92 -996.24 -12018.11
Floating P/L: -13030.28

Working Orders:
Ticket Open Time Type Lots Item Price S / L T / P Market Price
No Transactions

A/C Summary:
Previous Ledger Balance: 17655.31 Floating P/L: -13030.28
Closed Trade P/L: -18.94 Total Credit Facility: 0.00
Deposit/Withdrawal: 0.00 Equity: 4606.10
Balance: 17636.37 Margin Requirement: 1630.00
Available Margin: 2976.10
 
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Guess what happend in the meantime

Hi Pharaoh

Well after EU and AU pushing up like mad, most of the biger positions have been removed, leaving not much left.

Is there really nothing one can legally do in the US against such irresponsible fundmanagers?

Dustin Pass and his crew is hardly answering questions, but these greedy vultures keep sending promotions instead of offering any honest help, so one could make up for the loss.

Here is what i received:

--RSS--
Retail is $368 per month for all features. We can offer this package to you for $200 per month. This gives you access to the Live Trade Room, the RSS software and the Auto-Click upgrade all in one package.

--Bank Flow Service--
Retail is $799 per month for all features. We can offer this product to you for $399 per month. This gives you access to the Bank Flow Strategy Trade Room with Jonathan Silver and Ross Mullins as well as the Trade Alert Pro software that can alert you to specific trades and management suggestions.

Well anyway, another lesson learned.

Ernst
 
Wow. First they wipe out most of your account, and then they offer to rip you off some more. How kind of them to remember you.
 
Response

I have waited for some time to reply to this thread making sure that all possible solutions were explored before accepting defeat, so to speak. However, what’s done is done and my attorneys have advised me to move on as the fight with Interbank is a lost battle.

I know there are many that are upset with this situation and my words will probably fall on deaf ears however, this is what actually led to some of the accounts getting a margin call and others sustaining deep drawdowns.

I have been an IB with InterbankFX for some time and I had a bunch of business there. Late last year Interbank began having issues with the money management software and some of our trades were getting misallocated among the different accounts. Because we use very low leverage, our operating account, which is an account that shows the total P/L etc., did not show a substantial drawdown. It was not until we received calls from a few of our clients telling us that their accounts were drawn down that we knew there was a problem.

We contacted Interbank and after several months of going back and forth they said they understood there was a misallocation but we waited too long to tell them about it so they were refusing to fix it. Of course this made no sense to me as it was not going to cost them anything it was merely going to spread the existing loss or gain evenly across the accounts. We even had all our clients sign documentation giving us authority to change any allocation errors on their accounts in these circumstances. Despite this effort and thousands in attorney fees we got nowhere.

Because of this unacceptable handling of our client accounts, I stopped sending InterbankFX business until they fixed it as I could no longer refer people to them in good conscious knowing what they had done, especially knowing that some people were losing everything in some cases. When I stopped sending them business this opened a whole new issue up. InterbankFX was paying me thousands of dollars a month in IB fees for self-trader clients that I had referred to them (not related to the Managed account) and I was now no longer sending them business and this upset them.

I knew this decision would cost me 15 to 20k a month if they ever terminated my contract with them. However, my clients are more important than the money I was receiving. The managed account was still there as we were in the long term AUD/USD trade (which I might add I just closed out of on my personal accounts for around 36% gain. I say that to answer the accusations that the trading itself was poor.) and until we moved the managed account I assumed it would be business as usual.

Despite the negative impact it had on the clients, InterbankFX created policy stating I had to be registered as an IB with the NFA by a certain date or they would terminate my agreement. This was a way for them to keep the millions of dollars in equity from the self traded accounts that I had sent them without paying me for it. Again not related at all to the managed accounts but played a major role in what happened.

I would like to add that we started the registration process around 8 months prior to this and had done our part. We were already approved as a CTA but not as an IB. We were awaiting the NFA to approve us and Interbank knew the deadline they had set could not be met.

Once the deadline was set I was told that I needed to close all positions by a certain date, as a manager it was reckless to close all the open positions as the Aussie was nearing its high and I was confident that it would soon start its retracement.

I told Interbank that I would not close the trades and that they should allow me to continue to manage them and that I would do so for free if need be. After they declined this I suggested at the minimum they allow the account owners to manage the accounts on their own if they wanted to. Interbank agreed to this but it did not help those that were overleveraged. Once the deadline had past InterbankFX took control of the accounts from me without giving the client immediate control so there were many accounts that were running for weeks without anyone being able to manage them.

Prior to the deadline I suggested to those that were tight on margin to close the trade if it broke the high and to those that were leveraged properly to hold through the swing. All this happened about 3 weeks before the dollar rally where all the trades turned extremely profitable.

I have no problem with people telling their side of the story but it is crucial that everyone knows exactly what occurred and that each is basing their statement off of facts and not opinions of what they think happened. There are many negative remarks made towards me as a trader and my support staff in this thread however the reality is last year I made around 90% on all accounts and if the allocation issue had not happened and the accounts were able to stay under my management they would be at the same place as the accounts that I am still managing that were part of this whole issue. Those accounts are up around 36% on equity.

Regarding my support staff, I was advised to keep the information we released limited until our attorney had worked through the entire situation and this came across as if we were trying to hide info but the reality is Interbank was changing things so quickly I did not want to release any info until I was sure that it was fact.

Additionally, to those that lost money, we have offered to manage their account without charging a performance fee until we make back the loss despite the fact I do not feel the loss was a product of my trading but of Interbank’s actions.

Those of you that own a business know that these situations are very difficult and sometimes all you can do is move on. I hope that most can see through these negative comments and see the reality in it. I hold character and integrity in high regards.

Felix himself thought I was a scam at one time and after months of my products being successful he has came out and wrote quite a bit about the legitimacy of my business. In addition my company has a 4 star rating on this review site and that is not based on 3 reviews. At the time I am writing this we have over 40 dating back to 2006 so I am not new to this game. The link is

https://www.forexpeacearmy.com/public/review/www.forexmastermaker.com

Before I close I want to address one more issue that was discussed on this thread. That would be my fees and the allegations that I was churning the account. The reason I charge a 50% performance fee is because I can, when you make traders 90% in a year they are happy to pay you half of that because that is still over 10 times what they would typically get in a checking account and over 3 or 4 times what they would get from a decent performing mutual fund.

Regarding the PIP rebates; I swing trade meaning my positions are held for many months at times. With that said it should be pretty obvious that 1 pip times x accounts doesn’t add up when you are only doing it every 2 or 3 months. Just look at the reports posted to this thread and you will see that I am clearly not churning. Additionally a pip charge is pretty standard as well in the Forex industry for managed accounts.

The maintenance fee of 2% a year is industry standard also.

To close, I feel horrible for those that ended up losing their accounts, however the bottom line is the forex has many risks and they are not just related to trading. This is a good example of the less considered risks i.e platform issues and lack of broker cooperation. I only hope that all traders that enter into any kind of trading activity be it self trading or a managed account do so understanding the risks involved and only use risk capitol when investing with a manager or trading on their own as it is possible for some or all of your account to be lost.

Kind Regards,

Dustin Pass
 
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Jaw Dropping

I have just discovered this thread and I am still dumbfounded by what I am reading. This is a perfect example of y any Forex investor should always have multiple accounts w/different Brokers. I dont keep more than 10.000 grand in any account and routinely withdrawal ANY profits. And I am now very happy about my bailing out of IBFX after I witnessed 1st hand some of their "problems". Of course, this was a managed account and that hurts x2. I hope now more people are aware of any Broker's #1 goal(TO TAKE YOUR MONEY!) Dont give up the Dream(fight) Mr Educatedwarrior. This market and it's Bucketshops can be beaten! You may have lost a battle but the war is still ON! Good luck and God Bless.
 
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Hello Dustin,

I'm glad to see you here telling your side of the story. I do have a few questions:

1. If this allocation issue took profits for some client, are there some clients running around overjoyed since they made a LOT more than the were supposed to? If so, shouldn't one or two of them have popped up here at some point? Alternatively, if everyone agreed to correct reallocation, why not send out a note to those who made too much to refund it to a cash pool that would be used to compensate the ones who lost? They might even be able to take a tax deduction on it if this was structured correctly.

2. Offering to trade for no fees until losses are recovered is very generous. On the other hand, wouldn't you think that sending out advertising for some rather expensive services to those who took large losses was perhaps not the wisest marketing move?

3. As far as I can tell, a percentage of the high water mark is the closest there is to an "industry standard" for fees charged by forex account managers. Some charge additional fees per trade, others don't. Some charge an account setup fee, others don't. Some charge a percentage of the account as an annual fee, others don't. If you're making 1/2 of a 90% annual increase in account value, I'd think that the 2% annual maintenance fee would be so small in comparison that you wouldn't bother and instead would use the lack of other fees as an item in a "Why let me trade for you?" FAQ.

4. Shouldn't IBFX incorrectly allocating trade volume among accounts be fully actionable and sufficient grounds for you to launch a complaint against them with the NFA as well as a civil suit? In this thread alone, I see a number of people who would be happy to join in.

5. Did IBFX place the same burden on their other IBs/Account managers or where you singled out? If so, isn't this also grounds for action? If not, what happened to accounts run by other account managers in your position? What did the NFA think of this requirement, be it solely for you or for you and some or all of the other account managers?
 
Response

Hello Dustin,

I'm glad to see you here telling your side of the story. I do have a few questions:

1. If this allocation issue took profits for some client, are there some clients running around overjoyed since they made a LOT more than the were supposed to? If so, shouldn't one or two of them have popped up here at some point? Alternatively, if everyone agreed to correct reallocation, why not send out a note to those who made too much to refund it to a cash pool that would be used to compensate the ones who lost? They might even be able to take a tax deduction on it if this was structured correctly.

2. Offering to trade for no fees until losses are recovered is very generous. On the other hand, wouldn't you think that sending out advertising for some rather expensive services to those who took large losses was perhaps not the wisest marketing move?

3. As far as I can tell, a percentage of the high water mark is the closest there is to an "industry standard" for fees charged by forex account managers. Some charge additional fees per trade, others don't. Some charge an account setup fee, others don't. Some charge a percentage of the account as an annual fee, others don't. If you're making 1/2 of a 90% annual increase in account value, I'd think that the 2% annual maintenance fee would be so small in comparison that you wouldn't bother and instead would use the lack of other fees as an item in a "Why let me trade for you?" FAQ.

4. Shouldn't IBFX incorrectly allocating trade volume among accounts be fully actionable and sufficient grounds for you to launch a complaint against them with the NFA as well as a civil suit? In this thread alone, I see a number of people who would be happy to join in.

5. Did IBFX place the same burden on their other IBs/Account managers or where you singled out? If so, isn't this also grounds for action? If not, what happened to accounts run by other account managers in your position? What did the NFA think of this requirement, be it solely for you or for you and some or all of the other account managers?

Allocation issue:

When the trades were entered some clients were entered with more lots than they were supposed to be entered with and others with less. When my agreement was terminated all positions were in the negative. The issue is some were way negative because they had too many lots for their account size and others were far less negative because they had very little in the market.

What ended up happening in many cases people just closed down with the negative position so all clients with the exception of a few that followed my direction took a loss of some kind. With that in mind no one is going to give additional money up especially in this cicumstance. Only the accounts that I was able to continue to manage (my own and my families accounts) came back to profit with the exception of the few that followed my advice and held through the swing.

Regarding the Marketing:

Many requested discounts on my product for what had happened. The Bank Flow product is obviously split with Jonathan Silver so I cannot force him to discount his service for my managed account clients so I simply offered it to clients less my take. Regarding the RSS I also have other parties involved and again they are not going to discount there portions and I would not expect them to. I didnt send out a promotional email it was an offering based on the traders request for some sort of consesion and I was not trying to make money on this.

It is possible that some received promos but that would have been because they were on our mailing list and were receiving them as part of a company wide promo. You also have to realize that Traders Network AKA FX Dealer is a seperate company from the Signalling Services and really are not related in any way other than I happen to own portions of both. The emails didnt come from fxdealerselect which is the management company they came from the signalling company.

Regarding the 2% fee:

The 2% may not seem like much and to the individual trader it doesn’t affect them much however when you have millions under management collectively and you have a down year this two percent pays for the staff and accounting that is necessary to continue to run a business. I don’t like to have down years and haven’t really experienced one yet but I know the reality of trading and because i am a longer term trader I have been in trades for over a year at times and it is just good business practice. I never said I wasn’t in the business to make money.

Regarding a class action:

The suite you speak of against IBFX is a possible route however I can assure you they have the best attorneys on their side and we could likely end up spending more than what was lost before getting close to a ruling.

Regarding the policy:

It is my impression that the ruling was pointed directly towards me. This is an assumption based on the fact that I was able to get them to adjust this date back several times. I can’t imagine my negotiating alone would have impacted a companywide policy. However all IB's sign documentation stating that they will abide by all existing and future policies.

All good questions however I can assure you my attorneys have already considered all these options you have brought up.

Kind Regards,

Dustin Pass
 
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