Cameron Farley, FSA & Grant Thornton

wantanswers

Dunstohn you quoted:

You didnt invest with the FSA. You invested with Cameron Farley. So, any losses incurred are due to their activities. That is not an assumption but a fact.

I can’t argue with fact but my concern is my money wasn’t with Cameron Farley after the 2 September 2008 but held in a frozen pot somewhere?

Turbobob

What is known is that large trades were open from the 12 August 2008 - these had no "stop losses" set (really a sign of a shoddy trader) and were at the mercy of the market. As these trades were opened before the 2 September would you agree they were opened by CF?

I agree that trades on the exchange rate between Sterling and the US dollar appear to have been opened by CF before September 2008 but I am unclear as to their value at the 2 September 2008 and also to the management of these trades after 2 September 2008.

If I remember rightly (the report is not online anymore) this was long Euro short Dollar. In which case it was against the trend and would have been losing pretty much from day one. But what followed was some of the most volatile markets ever. This was around the time Lehman collapsed. If he'd got away with not using stops in the past and was able to "ride it out" he was not going to get away with it this time, as the Euro collapsed against the Dollar between August and November 08.

I’m not sure of your statement as the trades opened was the Sterling dollar.

New even larger trades were opened on 22 September (long Pound short Dollar if I remember rightly) which again would have gone against him from day one. Again no stops. The market moves a few percent but because of the massive trade size, the account is emptied and positions are closed..

Again I am not sure of your statement as the losses between the 23 September and 1 October 2008 were stated in the report to be between the Euro and the US dollar. Regarding the management of these trades I’m not sure , but what would help is if the Authorities would publish it as a statement of fact ie who placed the trades and then it prove violation of the freezing order which I would presume is against the law?

Did someone at the FSA take it on themselves to log into CF's forex account and open these new trades out of spite? Perhaps they fancied teaching these clients a lesson for going to an unauthorised investment company. Or was it a desperate all or nothing gamble by CF to try to win back the money that was in the process of being lost on the other trades? I know what I think.

I don’t feel the need to respond to your question totally hypothetical.

turbobob

wantanswers wrote: »

I’m not sure of your statement as the trades opened was the Sterling dollar.

Well looks like I got them the wrong way round then. Either way not good. You can look up histories of currency movements on sites like http://www.fxstreet.com

The earlier sterling/dollar would have been losing as at 2 September - sterling dropped about 7% against the dollar between 12 August and 2 September 08 (high to low). When this was ultimately closed on 6 October the total movement was around 9.3% in the wrong direction.

wantanswers

Turbobob

Thanks for that we all make mistakes.

Sterling/Dollar
So putting the other issues and questions aside for the time being and please bare in mind I’m no expert in forex trading from what you are saying the Sterling/dollar trade at 2 September $6,597,585 would have been 7% less ie $461830 less ie $6,135,755?

Euro/US Dollar
The report states between February and August 2008 five deposits, totalling $17,269,800, were made from the companies account. Currency trading continued throughout the period, with no significant gain or losses. So with your experience in the finance sector in your opinion what would that trade be worth at 2 September 2008? I’m assuming from the report that the $17,269,800 alludes to the Euro/Dollar Trade. I also assume by what the report states that at 2 September 2008 because of no significant gain or loss that account would be minimum $17,269,800 but that's an assumption it could have been more or less.

turbobob

wantanswers wrote: »

Turbobob

Thanks for that we all make mistakes.

Sterling/Dollar
So putting the other issues and questions aside for the time being and please bare in mind I’m no expert in forex trading from what you are saying the Sterling/dollar trade at 2 September $6,597,585 would have been 7% less ie $461830 less ie $6,135,755?

I'm no expert either, I dabble mainly with shares and the odd spread bet. Anyway, its difficult to say without more information. I understood the $6,597,585 was the actual loss. I was under the impression (from reading the report way back when this thread started, as you know it's offline now so can no longer refer to it) that they were valuing total trades in the $100 million plus range....

Its important to understand that forex trading is "leveraged" and "on margin". In plain English this means the broker lends you the money to trade, so you can take a much larger position than the amount in your account would suggest. This is why it is extremely risky.

The margin requirement is the amount you need to put up, and the broker provides the rest. If on a particular trade the broker requires a 10% margin, then effectively with just £10,000 in your account you could open a trade that was worth £100,000. If it goes 10% in your favour, you just doubled your money! If it goes 10% against you, the broker will close your trade and your account will be empty.

Euro/US Dollar
The report states between February and August 2008 five deposits, totalling $17,269,800, were made from the companies account. Currency trading continued throughout the period, with no significant gain or losses. So with your experience in the finance sector in your opinion what would that trade be worth at 2 September 2008? I’m assuming from the report that the $17,269,800 alludes to the Euro/Dollar Trade. I also assume by what the report states that at 2 September 2008 because of no significant gain or loss that account would be minimum $17,269,800 but that's an assumption it could have been more or less.

Again its difficult to say without knowing more. The movement in the underlying currency on this later set of trades was smaller over a shorter time period. However, it was my understanding that these later trades were larger.

wantanswers

Turbobob

Like you and probably more so I am just not experienced at all in Forex Trading and can only go off a copy of the Provisional Liquidators Report.

Your correct the $6,597,585 was the loss between the 12 August 2008 and 6 October 2008 so therefore it’s obviously now more confusing as to what was available in the Sterling/Dollar trade account as at 2 September 2008 when the authorities froze the company assets, I just assumed it started at $6,597,585 and ended at Zero at 6 October 2008. The value of the trade at £100 million in the Sterling/Dollar account I’m not sure about, however knowing what was available of my money at 2 September 2008 when the freezing order was imposed, is more important than forecasts I’m sure you’ll agree.

Regarding the Euro/Dollar option and funds available at the 2 September 2008 I suppose the only person to answer that question is Cameron Farley but from what I can get from the report it would appear to be in the region of $17.5 million. Unfortunately however Cameron Farley is still under whatever Law restrictions were imposed at the time of the freezing order so it looks unlikely I’ll get it from that source. Is there any other way you can suggest I try? Also you suggest knowing more, what would you like to know and I’ll try and get it as best I can if at all possible?

Rollinghome

Sound familiar?

Clients of Business Consulting International (BCI), a Knightsbridge-based investment firm accused of running an £80 million Ponzi scheme, are being invited to public meetings by City of London Police to be told how their money was lost.

Yet some of those investors appear not to believe they have been victims of a crime at all....

“Consequently, we get this situation where we find they do not believe us. Even though they have been arrested and we have searched their homes and offices and closed them down, the victims still do not believe anything is wrong.”...

At the meetings, held at a City police station, many investors reacted with disbelief as police explained that most of their money could not be traced and they were unlikely to see it again. Some people angrily turned on officers and accused them of provoking the collapse of the fund by freezing assets and making arrests.

Full story: http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6719692.ece

I hope you get a better outcome.

turbobob

Here's a couple of daily charts that shows the entry and exit points based on info posted in this thread (the green arrow indicates when it was opened and the red when the position was closed).

http://i48.tinypic.com/bhj913.png
http://i46.tinypic.com/2d96909.png

Theres not going to be an exact way to work out what was in the account on 2 September. That would be with Grant Thornton, or otherwise available from the forex broker (these firms generally issue daily statements AFAIK). As a very very rough guide, if losses on the GBP/USD trade were $6,597,585 with a 9.34% move in the underlying security, then you could say that each 1% movement would increase or decrease the account by about $706,379. If we say this trade was 7.01% in the red on 2 September then losses at this point would be approx $4,951,716.

This ignores important factors like margin interest (that money the broker stumps up does not come for free, and this incurs additional expense), any additional costs and the fact we don't know the exact entry and exit points.

wantanswers

Turbobob
Thanks for that will have a look through it.

Rollinghome
Old hat that one well new in terms of Cameron farley.

Here's a better one.
It is the second fine for Toronto Dominion, which was hit by a £490,000 fine in , when fixed income trader Simon Brignall attributed false values to his trading positions and created fictitious trades to hide losses

http://www.citywire.co.uk/personal/-/news/money-property-and-tax/content.aspx?ID=373547&re=7908&ea=235363


Margaret Cole, FSA director of enforcement and financial crime, said, 'This is one of our largest fines and it underlines the seriousness with which the FSA views repeat offences.'
'When we uncover failings in a firm we expect them to put it right immediately and to take special care to ensure it does not happen again. Toronto Dominion clearly failed to apply proper controls in this area despite its previous sanction and repeat offenders need to know that they will face severe consequences

Law for one eh!!!

I'll just add a comment re the atricle.

It matters not as to whether or not Toronto Dominion is a company owned by it's investors or a company owned by it's shareholders a fine of this nature would appear to be theft by legislation of customers funds by a regulatory body of no substance depriving those persons of assets whom they claim to be protecting .

The ability to raise income through this route is nothing short of disguised Communism and should be terminated at once . If however employees of this firm have acted outwith the laid down guidelines then they should bear the burden and not those who have no control over the action of thecompany's staff . Not only that but all fines levied should be as per the normal legal procedures .


Dunstonh.

Don't forget my concern?

wantanswers

All

I hope you understand my frustration's when I refer to below. There are words that can describe the comments but unfortunately I could not use them on here.

Content of meeting meeting with FSA May 2007.

Further to our meeting at 1.00pm today, I am writing to confirm the actions that we agreed during our discussions. You agreed to provide me and my colleague !!!!!! with the following information:

1)…. A log-in and password to grant us access to your online client information system
2)…. A copy of the communication(s) you have already sent to the investors
3)…. Written confirmation of your undertaking to cease accepting or conducting further FOREX business until the matters have been resolved to the satisfaction of the FSA
4)…. Written confirmation of your plan of action in terms of consulting experts for advice on the issues raised by the FSA, anticipated future action plan etc
5)…. Written confirmation of a suggested banking arrangement for holding client monies in a secure environment until the matters have been resolved to the satisfaction of the FSA.
We agreed in the meeting that Wednesday 16th May would be a suitable date by which to receive this information. We appreciate that you may not have been able to obtain all the advice you need by this date, but we would appreciate as detailed a response as possible to keep us up to date with progress.
If you have any questions or problems, please do not hesitate to contact me or my colleague !!!!!!. I look forward to receiving your response by Wednesday 16th May.
...........................................................................................................................................
I really love this comment by Margaret Cole Director of Enforcement FSA (17-12-2009) Taken from this link.

http://www.citywire.co.uk/personal/-/ne ... &ea=235363

'When we uncover failings in a firm we expect them to put it right immediately and to take special care to ensure it does not happen again. Toronto Dominion clearly failed to apply proper controls in this area despite its previous sanction and repeat offenders need to know that they will face severe consequences.
..........................................................................................................................................

dunstonh

I really love this comment by Margaret Cole Director of Enforcement FSA (17-12-2009) Taken from this link.

Whats wrong with that? The firm in question were regulated by the FSA and all the consumer protection exists as well as enforcement action possible by the FSA because they are regulated by the FSA.