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He made too much money so his broker kept it all

Discussion in 'Scam Alerts' started by Scam Investigations Committee, Nov 17, 2008.

  1. Scam Investigations Committee

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    FPA member Edforex was trading with MoneyForex. His trading was going very well and he was a happy customer.

    On October 13th, 2008, he tells us that he filled out a form to withdraw some of his profits. The next day, he couldn't login to his trading account. He sent an email to MoneyForex, and they told him that his account had violated their leverage policy and was suspended.

    How this happened was that a normal account with MoneyForex has 200:1 leverage. When Edforex's account balance passed $100,000, Money Forex automatically "upgraded" him to a platinum account. According to a message he got from Moneyforex, platinum accounts have leverage set at 50:1.

    The best thing MoneyForex could have done would have been to send him a congratulatory note. They then should have explained the limits on platinum level accounts and given him time to close any trades that pushed his margin over the limit. They didn't.

    MoneyForex could have suspended his account and cancelled just enough trades placed after the margin change to keep him within the limits. They then could have warned him about the new limits and let him keep trading. They didn't.

    Money Forex could have suspended his account and cancelled all trades placed after the margin change and then let him resume trading under the new limits. They didn't.

    MoneyForex could have suspended his account, confiscated every cent he made over $100,000, closed his account and sent him his $100,000. They didn't.

    Instead, MoneyForex told him his account was under review and he would not be able to access it in any way. Then they stopped answering his emails and phone calls.

    After Edforex complained to the FPA, Investigations Lt. Tessa guided him through the standard procedure of sending complaints and questions to all the different email addresses they could find for MoneyForex. When Edforex could get no response for an extended time, Tessa emailed them directly. After a time, a deadline was set, reminders were sent, and MoneyForex would not respond. To either Tessa or Edforex.

    Failure to return money to traders upon request is the primary definition of "Scam" for the members of the Forex Peace Army. Since MoneyForex refused to communicate about this issue, the FPA Scam Investigations Committee was left with no choice. By a unanimous vote, we find that the available evidence fully supports Edforex's complaint that MoneyForex is a scam.

    We strongly recommend traders not to do business with this company. We recommend withdrawing any funds and closing account you may have with them. We recommend against opening any new accounts with them.

    We hope that the owners of MoneyForex change their minds and decide to fix this situation. All they have to do to resolve the complaint is to give the money that legitimately belongs to Edforex back to him.


    Official Scam Finding against MoneyForex

    Edforex's Original Complaint
     
    #1 Scam Investigations Committee, Nov 17, 2008
    Last edited: Nov 17, 2008
  2. craigmalm

    craigmalm Recruit

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    A red flag

    While it is too late to help him now, checking this company's business location would have sent up a red flag immediately. They are incorporated in British Virgin Island. I am not proposing that there is no reputable company incorporated there but I for one would be very hesitant to open an account with a company in any country that didn't have decent regulatory laws. For companies outside the US the buyer needs to really do his homework before getting involved. Researching through the Forex Peace Army site should always be a first step filter. I am also not proposing that just because a Forex company is US based you won't get scammed. For those of us who read of the tragedy of others it should serve as a warning to do our due diligence. On the bright side it looks like the scammed member trades very successfully and hopefully he will be able to recoup this theft in the markets.
     
  3. Damir

    Damir Recruit

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    Scam brokers remedy

    First of all thanks for this warning and I am really sorry for Edforex. My personal advice to FX traders is to investigate their brokers BEFORE opening a live account with them. By investigating I mean obtaining black on white answers to the following questions:

    1. Is the broker a public company?
    2. Is the broker regulated?
    3. What is the broker's market cap?

    If the first two answers are affirmative and the third answer is >= 50M, then there is really not much to worry about, right? I mean, giving money to an offshore company (Virgin Islands, Cyprus, Malta, Isle of Man, Cayman Islands, ..) is almost 100% risk. Even UK companies, many of them are offshore. And, yes, ask for their incorporation act. It shouldn't be a secret, and if it is, then there's something really fishy about it. There is no way whatsoever that any jurisdiction on this Earth could get your money back if an offshore company be it a broker or a bank decides to scam you, so if it is offshore then you better make sure it's got a long tradition and a good track record.

    Another thing, guys, please take a good look at scam and scam alike brokers' web sites. They all look the same. They all have a very similar structure and say pretty much same things about "Why choose us". Do they enlist their top managers? No. Do they say anything about their most successful inhouse traders? No. I wouldn't be surprised if many of them were operated by the same group of people.

    Last but not least, since there is really a great deal of retail FX traders using MT4, how about FPA suggesting MetaQuotes Corp to deny further use/licensing of MT4 platform to all proven scammers? I believe this decision alone would help shut down most of them.

    My 2 pips worth,

    Damir
     
  4. Pharaoh

    Pharaoh Colonel

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    Wow! Someone beat me to the helpful advice. Good job guys.

    I'm not sure of MetaQuotes would really try to restrict sales to the worst brokers. I've read they have server side add-ins to help brokers cheat clients by manipulating slippage and requotes. Still, I guess it couldn't hurt to ask.


    I can't condemn 100% of offshore brokers, but Craigmalm and Damir are right that you should be very careful with that sort of broker. A licensed, regulated broker can also rip you off, but it's less common.
     
  5. C millo

    C millo Recruit

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    SCAM

    Is this POSSIBLE?

    This isn theft, aren't these brokers regulated?
    Can't Edforex appeal to the authorities?

    Day light robbery. unbelievable, now I am starting havinf doubts about my broker, I find it funny that when I am winning 20+ pips and wish to close the trade, I always have to requote.
    At first I thought it was my connection, but it doesn't happen with any other platforms, only with the one I trade most.
    Every time a trade goes against me and I close it, never have a requote only when I am infront.
    Well I am absolutely disgusted about Edforex.
    An well done Investigation Team.
    I sincerelly hope that Edforex gets his money.
    This article should be posted in Google so other people will not open an account with MoneyForex.
    Best of luck.
    C Millo
     
    #5 C millo, Nov 17, 2008
    Last edited: Nov 17, 2008
  6. leesystems

    leesystems Recruit

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    Identifying Scam Brokers, sooner.

    How about this idea on how to establish a good working relationship with a broker. When you make some money, request the broker transfer out the principle, being careful to make sure the requested amount is all part of the balance that is cleared. When they perform, trade some more, request a little more, and so on. It might keep down the number of lots one can trade for awhile, but, you will be establishing whether your efforts are going to be stolen or not.

    One other idea on any web based business. I always look up in whois.org or other sites that publish the web site owner's name and contact information. Then, also look up the name server [nslookup] domain name that is returned in the first search. This tells you where the server is actually physically located. When you get two different countries that are not part of the normal flow of information, it is a red flag. The more a broker tries to obscure their information, the more you have to worry about how they treat traders. If names just don't seem to make sense or match, it is a red flag.

    Cheers
     
  7. Codezilla

    Codezilla Private

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    It really pumps me up that the FPA pretty much bends over backwards to help forex traders caught in a scam. It shows selflessness and sprit de corps. Glad to be here.
     
  8. teicfcl

    teicfcl Recruit

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    File a Complaint with NFA.

    Edforex,

    I am under the impression that the company is moneyforex.com. If this is the case, I did a NFA search for Money Forex Financial and they are not members of CFTC or NFA. Virtually all individuals and firms who conduct futures-related business with the public must be registered with the CFTC and be NFA Members. Under most circumstances, it is unlawful for firms or individuals, who are not CFTC registrants and are not NFA Members, to conduct futures business with public customers.

    If you have not done so, you should file a complaint against MoneyForex with The National Futures Association. Here is the link to file a complaint: BASIC

    Good luck
     
  9. DesertRabbit

    DesertRabbit Recruit

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    teicfcl, what are you talking about? This is British Virgin Islands company! This is not a US corporation! They do not do business here, our friend WENT online, to their "territory", so US regulations do not apply.
    If a company is an offshore entity with not even a subsidiary in regulated jurisdictions its totally insane to do business with them in my opinion.
     
  10. ABDULAZEEZ I.T.AFOLABI

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    Re: Grand theft Broker.

    This is a broad day robbery, and I'm completely in agreement with Damir. As deterrent to other shameless Brokers, Damir's proposal must be put into play while, I will further suggest that as it has happened before, the FPA must again employ the services of the FBI to trap these scammers. I will also agree that members of the FPA must always consult the FPA's regular companies' review to avoid falling into the hands of these pseudopodia Brokers.
    God help FPA.
     

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