On July 25, 2012 broker company Broco informed its traders about the end of its broker activity in Russia and CIS countries. It has been officially stated by the Director General Valery Maltsev at the company’s forum.
Masterforex-V Academy, the best Forex studying project in Europe in 2012, kept warning about this three years in a row, starting with the article “Broco Refuses to Return Profit to Trader”. It is high time to sum up the results and make conclusions for forex traders...
So, why has Broco gone out of business, what are the lessons and mistakes of once popular and well-known, but currently broke-down forex broker?
Valery Maltsev: Reasona for Closing Broco are Legal
At the company’s forum Broco’s Director General Valery Maltsev has suggested his version of what happened. According to him:
1. Since July 2012 investigation teams of Main Investigation Directorate of Russian State Ministry of Internal Affairs have been holding investigation actions (withdrawing computers and documents, searches, and employee interrogations) in all Moscow offices of Broco GC, which gas resulted from opening a criminal case against Broco on suspicion in fraud.
2. SEC case (for more derails see “Why is Broco fined to $1.3 million by SEC?”) has not remained unnoticed in Russia, and the criminal case, which has paralyzed the work of Broco, has been opened.
3. Since July 25, 2012 the activity of all broker companies that make up a part of Broco GC has been stopped:
- because of the abovementioned problems and because of no network resources and access to systems the company’s clients are unable to receive service and technical support;
- since July 25, 2012 starting from 02.00 a.m. Moscow time the company’s clients and partners could close their positions in trading terminals;
- on Friday, July 26, 2012, starting from 11:59 p.m. Moscow time all positions were closed;
- clients’ claims (requirements) on payment of invested means are to be officially submitted in written form to the company’s legal address, sample documents are to be displayed at the company’s forum.
Judging by the statement of Mr. Maltsev, criminal responsibility for illegal or dishonest actions to Broco’s clients, followed by searches and confiscation of property (computer equipment, servers, documents), are the main reasons of the company’s closure, as it cannot continue its activity in such circumstances.
Experts: Broker’s Success at Forex Depends on its Decency and Trading Terms
In his statement about the closure of Broco broker company Mr. Maltsev has mentioned the matter, but not the reason – criminal case, as explained by well-known Canadian financial expert Evgeny Olkhovski in his interview to the “Market Leader”. The reasons lie deeper. For a broker company to be successful, it needs 3 things: unique suggestions on trading terms at forex market, public relations, and…decency. When at least one of the constituents disappears, there starts an inevitable downtrend of the broker’s activity. This is what has happened to once famous broker company Broco.
- at first, Broco has not paid profit to its trader (for details see “Broco Refuses to Return Profit to Trader” at Forex forum for traders and investors);
- instead of excuse, the girl-trader has been threatened by Mr. Maltsev; the company has not returned the profit with a load statement that “Broco’s legal advisors will chase her in American court for black PR to the company’s address” (for details see “Unknown Survival Guide for Traders when Brokers Refuse to Pay Profit”. Traders have been outraged by the phrase of Broco’s Director General Valery Maltsev “I am simply mocking you”, which has been addressed to the trader, who has been refused to pay the earned profit to.
- instead of the girl-trader, who has not received the earned profit by Broco, American court has concentrated on the broker company itself, having pleaded it guilty in в fraud at American market (for details see “Why is Broco fined to $1.3 million by SEC?” and “American Trial of Broco: Part 2”)
- only after this law-enforcement authorities of Mauritius (where Broco has officially received license its broker activity) and Russia have concentrated on its activity (see “Broco Investments Banned to Conduct its Activity” and “Why has License been Revoked from Broco Investments?”).
- even with no license for broker activity Broco was trying to enter financial market of other countries (for example, Belarus), naively supposing that people were unaware of its numerous scandals in Russian and the USA (for details see “Broco: will Broker Succeed in Belarus”). Such actions, by any principles (moral, business), are inadmissible for a broker that has a financial hole after a fine, imposed by the American court. As commented by another expert, representative of FXOpen Denis Peganov, in such case a financial pyramid of MMM type is formed instead of a broker company, and Broco’s specialists knew that this was the company’s end.
As a conclusion, Broco used to occupy…the last position in the third league of rating of forex brokers , as the company that is highly not recommended for opening a trading account:
Experts suppose that the company’s 4-year activity clearly shows what were the reason and the matter of stopping its activity at the territory of Russia.
“Reputation of a forex trader in the Internet is the foundation of any company... Broco has set the trend of its sad end on its own,” highlighted the experts.
