FXdirekt Hit With Claims Of Fraud & Boiler Room Activity
German broker FXdirekt Bank is under fire after media reports from German business portal Wirtschafts Woche published an article of fraud and aggressive selling practices taking place at the company. The report was written after FXdirekt had received numerous complaints about its services and was being sued by customers.
According to the expose, Wirtschafts Woche received copies of internal emails from both former and current employees that reveal the behavior taking place. Issues included the aggressive selling of high risk investments to clients where FXdirekt acted as counterparty to the trades and manipulation of prices to trigger customer losses. Dealer intervention included stop hunting and excessive Slippage Slippage In financial trading, slippage refers to the difference in price between the price an order was intended or expected to be filled and the actual price an order was filled. Slippage is a very contentious issue among retail traders, which can lead to issues. Many traders view levels of slippage at brokers as a key determinant for their business. For example, in forex trading, if a trader places a trade intending to enter a buy on the EUR/USD at 1.1080, but they only get into the market at a price In financial trading, slippage refers to the difference in price between the price an order was intended or expected to be filled and the actual price an order was filled. Slippage is a very contentious issue among retail traders, which can lead to issues. Many traders view levels of slippage at brokers as a key determinant for their business. For example, in forex trading, if a trader places a trade intending to enter a buy on the EUR/USD at 1.1080, but they only get into the market at a price Read this Term on market orders, or constant requotes. The broker also used a deceptive approach to win new clients.
According to the report, insiders and customers claim that FXdirekt would begin its fraud from before a client became a funded account. The broker created a Demo version of its platform with an artificial delay. On the phone, an FXdirekt representative would know where the price would be heading soon and coax a potential client to make a trade. After gaining, they would then make them believe that Demo trading it is like real trading and their easy profits would be replicated once using real money. Clients that lost money in their demo accounts would have funds added so prospective customers wouldn't realize they were losing.
They also made reference to how the company gained from client losses and customers were expected to lose all of their money. The report also mentioned how losing customers were urged to redeposit funds to try and win back their losses. In addition, employees were given low salaries with high commissions to encourage aggressive sales behavior. According to the article, the act of ill advise and "pushing" of trades by clients was a directive from their "Boss."
After funding a real account, dealers would monitor when clients were logged in. Dealers would then take advantage of offline customers to trigger stop losses and or margin calls in their accounts. Complaints of false margin calls had been brought up in the past to BaFin, but no fines or actions were implemented by the regulator.
In addition to clients, employees were also being taken advantage of. Sales agents were given high quotas that forced them to make high amounts of sales calls while also setting minimum duration limits for conversations. Also, to try and rig "Best Broker" polls, the broker had employees purchase pre-paid calling cards under aliases and use them to call and vote in favor of FXdirekt. The report also claims that the company would issue loans to employees and then use repayments as leverage to cause them to initiate their aggressive sales policies.
As expected, FXdirekt Bank which claims to have 40,000 customers has denied the allegations. However, the complaints have caused Cortal Consors, a subsidiary of BNP Paribas that acted as a business introduce for FXdirekt to sever ties with the German broker.
While such activities from a broker are nothing new, they do cast a black eye on the German regulator BaFin which requires German brokers to be registered as Banks. As such, the public will be pressuring the BaFin to understand how it let a German Bank operate its business like a rag-tag boiler room. According to Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term Magnates sources, BaFin is currently investigating the broker.
German broker FXdirekt Bank is under fire after media reports from German business portal Wirtschafts Woche published an article of fraud and aggressive selling practices taking place at the company. The report was written after FXdirekt had received numerous complaints about its services and was being sued by customers.
According to the expose, Wirtschafts Woche received copies of internal emails from both former and current employees that reveal the behavior taking place. Issues included the aggressive selling of high risk investments to clients where FXdirekt acted as counterparty to the trades and manipulation of prices to trigger customer losses. Dealer intervention included stop hunting and excessive Slippage Slippage In financial trading, slippage refers to the difference in price between the price an order was intended or expected to be filled and the actual price an order was filled. Slippage is a very contentious issue among retail traders, which can lead to issues. Many traders view levels of slippage at brokers as a key determinant for their business. For example, in forex trading, if a trader places a trade intending to enter a buy on the EUR/USD at 1.1080, but they only get into the market at a price In financial trading, slippage refers to the difference in price between the price an order was intended or expected to be filled and the actual price an order was filled. Slippage is a very contentious issue among retail traders, which can lead to issues. Many traders view levels of slippage at brokers as a key determinant for their business. For example, in forex trading, if a trader places a trade intending to enter a buy on the EUR/USD at 1.1080, but they only get into the market at a price Read this Term on market orders, or constant requotes. The broker also used a deceptive approach to win new clients.
According to the report, insiders and customers claim that FXdirekt would begin its fraud from before a client became a funded account. The broker created a Demo version of its platform with an artificial delay. On the phone, an FXdirekt representative would know where the price would be heading soon and coax a potential client to make a trade. After gaining, they would then make them believe that Demo trading it is like real trading and their easy profits would be replicated once using real money. Clients that lost money in their demo accounts would have funds added so prospective customers wouldn't realize they were losing.
They also made reference to how the company gained from client losses and customers were expected to lose all of their money. The report also mentioned how losing customers were urged to redeposit funds to try and win back their losses. In addition, employees were given low salaries with high commissions to encourage aggressive sales behavior. According to the article, the act of ill advise and "pushing" of trades by clients was a directive from their "Boss."
After funding a real account, dealers would monitor when clients were logged in. Dealers would then take advantage of offline customers to trigger stop losses and or margin calls in their accounts. Complaints of false margin calls had been brought up in the past to BaFin, but no fines or actions were implemented by the regulator.
In addition to clients, employees were also being taken advantage of. Sales agents were given high quotas that forced them to make high amounts of sales calls while also setting minimum duration limits for conversations. Also, to try and rig "Best Broker" polls, the broker had employees purchase pre-paid calling cards under aliases and use them to call and vote in favor of FXdirekt. The report also claims that the company would issue loans to employees and then use repayments as leverage to cause them to initiate their aggressive sales policies.
As expected, FXdirekt Bank which claims to have 40,000 customers has denied the allegations. However, the complaints have caused Cortal Consors, a subsidiary of BNP Paribas that acted as a business introduce for FXdirekt to sever ties with the German broker.
While such activities from a broker are nothing new, they do cast a black eye on the German regulator BaFin which requires German brokers to be registered as Banks. As such, the public will be pressuring the BaFin to understand how it let a German Bank operate its business like a rag-tag boiler room. According to Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term Magnates sources, BaFin is currently investigating the broker.