Ali Son wrote:Sorry to hear you got fleeced as an unsecured creditor. I will proceed with caution. I guess that's another advantage for the big players like hedge funds to trade directly with the banks.
Before I post this, I want to tell anyone who strongly disagrees with me to
do the homework I did before they post a reply.
How do you propose to "proceed with caution"?
There currently are no laws to protect you the way futures traders are protected. I spoke to the attorneys at the NFA directly and they are powerless to help you the way the laws are right now.
They are deathly afraid of the senario I am laying out here.
No matter what any of these forex brokers tell you about how safe your money is, there is nothing you can do if they run into trouble and no one to help you.
If they are taking the other side of your trades and there is a
1987 type of move in the markets you will find out the hard way.
This may never happen and for your sake I hope it never does.
Even the brokers who trade directly with the interbanks are under no obligation to segrerate your funds in the event of a bankruptcy filing.
It is a loophole in the current laws that Refco's lawyers are expoilting.
Jim Rodgers, the famous futures trader who helped make George Soros a billionaire when he managed a currency fund for Soros is out 430 million and is being sued by several of his shareholders because Refco moved his money into an unregulated division called Refco Capital Markets just before they filed for bankruptcy. Rodgers is suing Refco for moving the money and that is his only hope to get his money back.
No one is safe until the do nothing Congress gives the NFA/CTFC more
control over the forex market.
This is what happened in the 1930's before FDIC insurance. At first a few banks failed and people felt sorry for the people that lost money. Then everyone got screwed.
Tell your forex broker to give you a personal guauantee in writing that they will return your trading capital to you and see what they say.
They will laugh all the way to the bank.
Again, I hope I am totally wrong and that this never happens to anyone else. I am not posting this looking for sympathy. I am posting this as a warning that nothing is being done to prevent the next Refco.