As many readers of our Russian site were concerned by New Zealand’s warning against the Ukrainian Broker Forex Trade, Finance Magnates contacted the relevant authorities for response. In the meantime we turned to an expert to see what can the traders do. Sophie Gerber is the director of the compliance and legal firm Sophie Grace which specialises in Australian, New Zealand and international licensing and legal requirements for financial services companies.

Who is entitled to approach the FDR, are there any minimum requirements in terms of funds?

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Anyone can approach the FDR. There is no minimum requirement in terms of funds, however they may first require you to go to Forex Trend and lodge your complaint with them to see if you can achieve a resolution first. However in this situation, given it is proving to be an issue affecting lots of people which has been publicly announced by the FMA, I imagine FDR will accept the dispute straight away.

[This situation is the inverse of the article we wrote last week about how brokers can deal with complaints]

If a liquidator is appointed, after the fees associated with that process, there won’t be much money to distribute to clients

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How long does it usually take to settle such claims?

If Forex Trend does not capitulate and provide you with the desired outcome at the beginning, it may take several months to achieve a finding from the FDR and even longer to implement the decision (i.e. get any money back).

What are clients’ prospects of withdrawing funds via the FDR, and are the authority’s abilities to enforce its decisions?

I believe it will be quite difficult given the FMA has received information that the company cannot meet its debts and a liquidator is going to be appointed. The FDR will not be able to force complaints that have gone through to have priority in a situation where Forex Trend already has a liquidator appointed.

Unfortunately, if a liquidator is appointed, after the fees associated with that process, there won’t be much money to distribute to clients. Without knowing much about Forex Trends, it appears that they may have had a system in place where client monies were sent to the Ukraine for hedging purposes – in which case it will be very difficult for the liquidator to unwind these transactions and get the money back to New Zealand to distribute to affected clients.

Are there any suggestions to non NZ residents who try to withdraw funds from the company?

The same as above applies to non NZ residents.