“Dear Clients, we regret to inform you that the Company is ceasing operations”… is one of the scariest statements to receive as a trader in the financial markets. Even more so, in the foreign exchange market which has more than its fair share of hidden risks and pitfalls.
Given that the forex industry is based on client deposits, in the absence of official regulation one of the most effective tools available to market participants to mitigate the risk of choosing the wrong broker is to turn to social media and professional forums. Online forums often give readers an accurate snapshot of the amount of claims and complaints raised against a particular broker. One such recent example is the recently closed ForexInn.
The following statement was posted on the ForexInn website just recently: “Dear Clients of ForexInn. We regret to inform you that the Company [ForexInn] is ceasing operations in Russia and the CIS”. Soon after, the website was completely inaccessible while details as to why ForexInn is closing were not provided.
ForexInn is headquartered in Hong-Kong and first appeared in the Russian market in 2010 under the trading name of ‘ForexInn Partners’. The company’s slogan is “The main thing which separates us is our concern for clients – for those that trust our growth prospects”, which looks increasingly ironic in light of growing numbers of posts and complaints on several forums catering for professional traders.
KROUFR, a Russian Self-Regulatory Organization (SRO), recently published the following statement on its website relating to ForexInn:
“The company is not an active member of any regulatory organisation such as KROUFR, CRFIN and others. There have been regular complaints from traders visiting ForexInn, complaining of payments issues”.
This announcement correlates with the fact that ForexInn did not at any stage have any regulatory notifications or licences on its previously operational website, nor did the broker publish any risk warnings relating to forex trading.
Instead, the company specified its Hong Kong registration, presented its trading platform and marketed its own unique selling points including the following statement:
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“ForexInn provides access to the international forex market and offers a wide range of products and services relating to trading currencies. We offer agreeable terms of business for both Investors and Traders. Our advantages are obvious: rapid commission-free withdrawals, low spreads and multifaceted client support”.
Following the website’s closure, the only way to test the broker’s claim of “rapid withdrawals” is via email. In its final announcement, the broker said that withdrawal requests should be sent to firstname.lastname@example.org.
Unfortunately, this is not the most reliable means of communication but for those haven’t taken an interest, the company’s office created by Vladimir Ivanov and Bulat Nabibulin is located in Moscow’s CBD.
Here is a selection of how existing clients have reacted to the broker’s closing on social media and forum posts:
“I have made a statement to the police and told them they are likely to receive many more as there are many such broking scams in Russia”; “ForexInn doesn’t exist anymore and I think the email address provided for withdrawals also doesn’t exist”;
”I came across this ‘forex kitchen’ with a success story. Barely 5 minutes after its collapse, I am very interested”; “ForexInn employees have not been paid since May, clients cannot withdraw since March – have a think about it and put two and two together. Capital in the company has run out.”
“People, be careful when choosing your broker. Check the licenses, research the company’s history and read user reviews online”; ”In Tyumen, the company’s manager has run off and taken equipment with him, leaving a junior secretary in charge to lumber under the circumstances”.
The collapse of yet another forex broker is not surprising and again highlights the problem of viably regulating the forex industry. This recent case involving ForexInn should remind traders to observe maximum due care and attention when selecting a broker to whom you are entrusting your capital.
Written by Vadim Sviderski and first published on ru.forexmagnates.com
Translated by George Tchetvertakov