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Two New Managed Account Scams

Discussion in 'Scam Alerts' started by Scam Investigations Committee, Dec 23, 2008.

  1. Scam Investigations Committee

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    Managed forex accounts can be very dangerous. You have to trust the brokerage. You have to trust the managed account company. You have to trust the account manager who will trade your account. If any one of these fails to live up to your trust, you can lose all your money.

    We've had 2 different managed account companies investigations reach the end in the last 2 days. These are HSNNA and Lloyds Capital Group LLC (LloydsFx).


    FPA member Trader B had an account managed by HSNNA. First, HSNNA required him to use HSNNA as an introducing broker. This arrangement cost Trader B an extra pip per trade. HSNNA's representative, Jason Drenston, told Trader B that the broker required this. According to the broker, this was not true. This put HSNNA in a position to overtrade the account in order to collect excess spread commissions. This added up to over 10% of the account balance per month sometimes. Instead of being profitable, the initial balance was eroded by excess spread commissions and eventually destoyed by poor risk management. Trader B had already expressed concerns about over trading and excess risk, but HSNNA continued to trade the same way.

    Two other FPA members also reported losing the bulk of the money in their accounts managed by HSNNA due to poor risk management.

    After a time, Jason Drenston stopped responding to Trader B's messages. He then came to the FPA. FPA Investigator Tessa and Trader B repeatedly tried to contact HSNNA and Jason Drenston, but could get no response. The HSNNA website has been suspended. It appears that the people behind this have decided to take the money they have and leave.

    We cannot consider poor trading alone to be a scam. We do consider refusing to speak with a trader to be unethical. We consider deception about IB commission structure to be unethical. We consider churning an account to generate excess commissions to be unethical. We consider failing to address a trader's concerns about risk to his account to be unethical. On this basis, we consider FPA member Trader B's scam complaint to be confirmed.

    Trader B's original complaint about HSNNA

    Official Scam Confirmation - HSNNA



    FPA member Jimbo911 experienced his own case of a forex account manager failing to follow proper risk management rules. He had an account with Lloyds Capital Group LLC (LloydsFx). After experience a huge drawdown over a 2 to 3 day period in October, there was some talk of compensating him. This was because Lloyd's representative, Thomas Yoos, had assured Jimbo911 that stop losses would prevent the loss of more than 10% of his account balance.

    After some initial negotiations, Jimbo911 couldn't get any reply from LloydsFx and complained to the FPA. FPA Investigator Gerard originally contacted the company. They were initially very polite and thanked the FPA for making efforts to help, but said their corporate lawyer wouldn't let them speak about the issue or reply to Jimbo911. This was supposed to be since the issue involved a possible lawsuit. Gerard tried several times to try to find a way to restart negotiations, but LloydsFX absolutely refused to discuss the issue with the trader who's money they had lost. Later, LloydsFX tried to tell Gerard that they had no unhappy customers. Gerard found out about another client who had the same problem, and suddenly LloydsFX started placing odd conditions on any further discussions with the FPA. This included full contact info for the FPA's administration and even stranger items, such as the exact date the FPA was founded. In response, Gerard informed them that all FPA investigations are conducted in written form and never by phone to avoid any miscommunications. Further, he asked for the corporate lawyer's email address.

    LloydsFX refused to give any info that would even confirm that there ever was a lawyer. They also continued to refuse to talk to Jimbo911 about violating the terms that had been discussed and what could be done to repair it.

    We believe that there may never have been a corporate lawyer. This company appears to be only 1 or 2 people and they are hiding behind a probably fictitious lawyer to avoid compensating traders for damage done to accounts. He (or they) seem to have shut down the company website.

    We cannot equate poor trading alone to scam. We do consider failing to follow promised risk management to be unethical. We can not force
    any company to communicate directly with us, but find the refusal to communicate with a trader who had suffered excessivelosses due to the actions of LloydsFX to be unethical. We find the claim that LloydsFX never had an unhappy customer to be false, and therefor unethcial. On this basis, we consider FPA member Jumbo911's scam complaint to be confirmed.


    Jimbo911's original complaint about Lloyds Capital Group

    Official Scam Confirmation - LloydsFx
     
  2. C millo

    C millo Recruit

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    managed account

    After reading your article about the excess spread, I am extremely happyn to be a member of FPA.

    Soom Im am going to tell my story with FXDD, with screen hunter recordingsm to prove my point.

    However you guys are doing an extremelly good job, to exposed the "gangsters" in this forex business./
    Well done FPA.
     
  3. omo9ja

    omo9ja Private, 1st Class

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    Oh my God! I honestly feel for these Guys. But what kind of punishment can really be meted out these cheats that will sent the right signal to other ones?
    Its really unfortunate. My candid advice is that we all just have to take our financial destiny into our own hands. This TRUST issue is gradually becoming a charade by the day.
     
  4. vincenta

    vincenta Recruit

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    Scam Brokers etc

    Well said all.

    May I suggest to the FPA heavies, that as well as the excellent reports and exposes you do that you also introduce an immediately searchable list of reported scams?

    You may already have this (and I'm just yet to see it) but if not, I think this is something that would be extremely useful, especially to newbies who have the most to gain form the FPA anyway.

    Immediate usage would be to quickly verify if any broker one is considering using has been previously listed as a scam. Unfortunately, there does not seem to be anywhere on the site where one can go to for 'recommended' or at least 'reputable' institutions to build an account with!

    regards
    V
     
  5. AsstModerator

    AsstModerator FPA Forums and Reviews Admin

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  6. PistolDave

    PistolDave Corporal

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    Trust me -- I'll return it -- I promise.

    In this case I believe the quote from Mark Twain is in order:

    I am more concerned about the return OF my money than the return ON my money. --Mark Twain

    I'm sure the late author would have plenty to say about the financial situation these days, especially the forex bucketshops and money "management" scams that exist today.

    Keep going FPA ;)

    PistolDave
     

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