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Tuesday, 23 May 16:25 (GMT -05:00)



Foreign exchange market

New Scandal with Large Forex Broker: IronFX “Under Investigation" of CySec


 

“To all appearances, crisis of Forex brokers continues," unanimously claim many analysts. And there is no bottom to this bearish trend. Not only small and medium players quit the market, but also such famous companies as Forex Trend, "Panteon-Finance", RVD Markets, etc.
 
Problems of Forex Brokers: Who’s Next?
 
Next in turn is another Forex broker company with a famous name – IronFX. This broker has offices in many countries worldwide and works by licenses given by the world’s leading regulators, including FCA (Great Britain), ASIC (Australia), and CySec (Cyprus ). Until very recently IronFX used to be a full-fledged member of Russian CRFIN and was among those who defined the "black list of Forex brokers" for traders of Russia and CIS on behalf of this non-governmental organization.
 
What Happened to IronFX? Why has a Forex broker with offices in more than 60 countries, where 1,400 staff members used to work up to this moment, entered a bearish trend, and how is a sponsored by it football team “Barcelona” missing one goal after another in a game for the Super Cup of Spain ? What are traders and investors dissatisfied with in the company’s activity? Why has the authoritative Cyprus Securities and Exchange Commission (CySec) started investigation concerning IronFX?
These and many other not less sharp questions have been thoroughly studied by journalists of the "Market Leader" jointly with a leading expert of Masterforex-V Academy, the head of Canadian financial corporation EUTA Capital Evgeny Olkhovski.
 
Crisis of a Famous Forex Broker or Temporary Troubles?
 
“Let us start with the fact that Cyprus regulator has a reputation of a rather loyal organization, providing favourable terms for financial companies, including Forex brokers that work under its jurisdiction. This means,” explains Evgeny Olkhovski, “that for CySec to start seriously dealing with such broker as IronFX, there has to happen something truly off the scale.”
 

And it happened. According to the regulator, the decision about investigation activity about IronFX has been made on the basis of corresponding materials in media, as well as numerous complaints, submitted to the Commission by clients of the broker.

 

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The message says that when CySec investigation is over, there will be provided a full report and defined measures concerning license of IronFX Global Ltd – the main company of IronFX Group. At the same time, the Commission suggests client victims (among which Russians), not to wait until the situation is resolved, but to address a financial ombudsman of Cyprus Republic, authorized to regard requirements on return of means on an extrajudicial basis (complaints@financialombudsman.gov.cy or via electronic form on his official web site).
 
How is That? IronFX - Member of UCRFIN with Numerous Awards Suddenly has Problems with Financial Regulator of the European Union?
 

"IronFX truly has a great number of awards from various “Forex exhibitions", including the title of “Better Russian Broker of 2014",” comments Evgeny Olkhovski on the situation.

 

 

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And only one rating of Forex brokers compiled by Masterforex-V Academy warned: IronFX has complaints from traders and is on the 57th place of 3rd (lower) league of Forex brokers, where opening trading deposits is strongly not recommended, as there are numerous complaints from Forex traders.

 

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Evgeny Olkhovski admits that CySec investigation concerning IronFX has simply confirmed the accuracy of "forward-looking indicators" of Masterforex-V rating; moreover, there come to light new and new facts about activity of other offices of the company, including the ones in Great Britain.
 
According to latest financial reports, the cost of British IronFX amounts to about 60,000 pounds sterling, whereas means remaining on accounts amount to less than 90,000 pounds. If according to results of CySec investigation a decision is taken not for the benefit of the broker, then licenses of IronFX for activity in Great Britain, Australia, and some other countries will be suspended or even annulled.
 
“By the way,” highlights the specialist, “even before problems with Cyprus regulator IronFX started actively reducing its staff in Russia and CIS by closing offices without paying salary to workers.” Besides, the broker has withdrawn from SRO CRFIN (Centre for Regulation in OTC Financial Instruments and Technologies), although it maintained membership in the organization even during scandal with Chinese clients, which has caused a stir all around the world (see more about it below). At the same time, employees of IronFX claim that membership in another non-governmental organization - Ukrainian UCRFIN, is enough for the company.
 

As broadcast by some media, IronFX has dismissed the total of 50 workers from East European offices, including specialists of support service, which amounts to about 10% from the general working personnel of the company. And around the world, according to information received by WhiteMoon trader in informal atmosphere from one of staff members of the company’s central office in Cyprus , the situation is even more wailsome:

 

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The broker’s official position on the situations is stated as «necessity to restructure IronFX in the face of more complicated market conditions in 2015».
 
Whan Caused Traders’ Discontent with IronFX?
 
“Coming back to the main topic – CySEC investigation of IronFX activity, let me admit that complaints of traders, clients of the company have become the main “trigger” in the situation. They mostly concern refusal of the broker to pay profits and output means. At the same time,” highlights Evgeny Olkhovski, “similar complaints, including the ones from Russian traders, have appeared already in 2014, in other words, when the company was entering CRFIN.
 
However, for some reason, this organization did not pay attention to them, although one of its main tasks, according to its own statute, is consideration, full and objective, of all remarks and pretensions to its member companies and taking corresponding decisions.”
 
2 years have passed since problems with nonpayment of money means to clients of IronFX “started”. But, to all appearances, the situation has not changed for the better. This is written about by victims, as well as those who got acquainted with the broker only “on the third hand” and luckily have not managed to bring in their means to the company’s accounts, although it was actively appealing for this even to unregistered users, having found their contact information out of nowhere.

 

For example, a user of a popular Forex-forum MMGP, where, by the way, IronFX is placed into a category of “Problem ones”, writes the following:

 

 

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And this is not a single case. However, the most howling ones remain the problems with nonpayment of means by the broker to its clients, as well as holding traders’ positions by the company until they not go in minus or, on the contrary, closing such in most inappropriate moment.
 
Yet on August 28, 2014 a trader under a nick sh4848 wrote that initially managers of IronFX are very polite, «tout to trade in their company by claiming that there are no limitations, all orders are withdrawn despite type of account, but then there is a letter from IronFX Dealing with a warning that your account is blocked because it is being checked, and then in twenty-four hours profit on it disappears and ordinary orders are cancelled together with news ones».

 

At the same time, the trader admits:

 

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Many other traders agree with him, in their turn saying that when orders go in correct direction in their trade, they are mandatory closed with the explanation “term elapsed”. And nobody explains what “term” and why “elapsed”. As an example one user places a screenshot:

 

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“Earlier,” informs Evgeny Olkhovski, “in May 2014 a trader Alex Trader has placed his pretension about dishonest work of the broker at the same forum:”

 

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And such examples are many. Besides, nonpayment lasts for months, and often problem with it is not resolved at all. In their turn representatives of IronFX insist that not they, but traders are trying to deceive the company by breaking trading regulations. Let us cite word-for-word the answer given by IronFX to traders’ complaints:
 
“If the goal of Your strategy is to deceive the Company by breaking its rules and regulations, the Company reserves the right (this is spelt out in trading terms and terms of providing a bonus, which You could get acquainted with during registration of the account) to block profit.However, if Your strategy is built on elements of technical, fundamental, or other types of financial market analysis with the purpose to predict price movement, You can always withdraw your profit and body of the deposit.”
 
Unfortunately, in 2014 and 2015 traders fail to withdraw for months not only profit, but also means not involved in trade. However, the example of Chinese colleagues, mentioned above, has shown that one can and should fight for his/her money, for fair and honest service. And it is not in vain, as supposed by many.
 
How Chinese Traders Assert their Interests
 
Speaking about scandal in China, it is worth mentioning that, as it turned out, IronFX used to work in the Celestial Empire... without corresponding licenses, which give a right to provide services on access to financial markets on the territory of the PRC. Local traders have succeeded in making the investigation activity about the broker be taken by the government.
 
“At the same time,” comments Evgeny Olkhovski, “not only Chinese clients of IronFX have suffered, but also the company’s affiliates. They also complained about the fact that winning positions in the broker’s terminal always closed. Quitting a position was only possible when it was was making a loss. Traders said that other trading platforms did not show similar “drawbacks”.
 
In addition, Chinese traders and affiliated agents of the broker have informed that their means have not been transferred for safekeeping in foreign banks, as promised by IronFX. As a result, patience of victims has run out and they addressed Shenzhen Investigation Bureau of Economic Crimes, where they have been informed that the case referred to the category of “frauds”, and corresponding investigation would be held concerning it.
 
Not only Chinese clients of IronFX can "move the block" from one place. Some Russians, victims of the broker’s actions, have also gained certain positive results. For example, a trader Dmitry, who explains that he has placed his history at the forum in order to show "practical opportunities on advocating one’s position". At the same time, he highlights that if he had chosen a DC, working offshore, chances to obtain justice would be smaller than when choosing a broker under European regulation.

 

Dmitry writes:

 

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Owing to the fact that the trader has not let the matters drift and, as he informed, “signed an agreement with international legal company with offices in Great Britain and Cyprus about representation of my interests in complaints to this broker", he could achieve positive results.

 

More details about steps taken by Dmitry and reasons why he has decided to do more than submit pretension to IronFX, but also initiate a lawsuit against CySEC, can be found at forum for traders of Masterforex-V Academy and MMGP. He was also going to "initiate consideration of the problems on-topic in Ministry of Finance of Cyprus and other institutions". Now let us cite words of the trader about results he has reached:

 

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Conclusions and Concerns of Experts
 
We will probably find out not soon the outcome of the situation with nonpayment of money means to traders of IronFX. However, judging by success of Dmitry, as well as the fact that his example has been followed by many traders, who have appeared in a similar situation, we may assume that in the end they will assert their interests. “At least because IronFX works under jurisdiction of the EU, which implies strict control over the company’s financial activity," comments Evgeny Olkhovski.
 
Yes, we see that CySEC seems to be “delaying" the process of investigation, as supposed by many, but at the same time the Commission has made an official address, assuring that results of the investigation will be made public in full scale. And as far as the case touches the interest of Commission itself, its competence, consequently affecting financial governmental authorities of Cyprus , as well as the European Union (we have mentioned above that the broker has offices under regulation of other authorities of the EU, FCA in particular), the procedure is highly unlikely to be biased, unless conspiracy is revealed, which is unlikely.
 
“Nevertheless, such problems could be avoided if traders did not hurry to sign agreements with the company on the basis of its “famous" name.First of all, they should have paid attention to QUALITY OF REAL SERVICE, by getting acquainted with corresponding feedbacks of those, who have already worked with it. For this reason, the most highly authoritative in the last years rating of Forex brokers of Masterforex-V Academy has always placed this broker company... in 2nd or even 3rd league as not recommended to Forex brokers. Hence, it is strange,” explains Evgeny Olkhovski to the "Market Leader" how IronFX:
 
* could be a member of the management team of Russian CRFIN for a long time and still remain a member of UCRFIN, which fight for “constant improvement of quality of services provided at Forex market", consult specialized committees of the State Duma of Russia, as well as make up "black lists" of dishonest brokers, take part in Arbitration Court of CRFIN...”
 
“If such happened in the USA or Canada, the entire management team would be resigned, whereas we do not see even official explanations and excuse from CRFIN and UCRFIN about start of investigation of IronFX activity by CySec (Cyprus ).How such broker have tens (!) of traders’ pretension and still be among them?" concluded the Canadian expert.
 
Another expert questioned by the “Market Leader", ex-president of KROUFR Natalia Zotova, highlights the fact that membership of such companies as IronFX in CRFIN, UCRFIN, and even position in ratings, unfortunately, is not always is a guarantee of a company’s reliability. The reason for this is the fact that these structures sub-delegate examination of safety to such regulator as CySec (Cyprus ), which uses its own criteria. Consequently, it turns out that companies get into a black list only when payment stops. As a result, traders suffer.
 
“This is a real problem, and it needs discussion, and native regulators and compilers of various lists should look for their own indicators that will help to prevent problems," concluded Natalia Zotova.
 

 

 

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