Crown Forex / Twin Cities saga continues; no sign of $190m

To those who don’t remember: Crown Forex S.A. was a forex broker based in Switzerland. On 29/05/2009 FINMA closed Crown Forex S.A because of potential liquidity problems. FINMA is investigating the company and its executives.

A month later we learned that there was another scandal associated with this broker – a Twin Cities fund manager was charged with scamming his investors for over $190 million, part of which was invested with Crown Forex. This fund manager, Trevor Cook, also appears to have used part of the money to acquire a controlling stake in Crown Forex S.A

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Another significant fact that went unnoticed is that the same Trevor Cook appears to own 35% of JDFX – a well known Swiss forex liquidity provider.

It appears that Trevor Cook bought the whole forex ‘food chain’ and might have used third parties like Crown Forex and JDFX to channel his investors money to other places. I doubt any investor would trust him with their money knowing that he controls both the fund, the brokerage he trades through and the liquidity provider. It would be interesting to understand whether JDFX was a liquidity provider for Crown Forex at that time. Something tells me that it probably was.

Following this, the SEC charged Cook with violating Sections 5 and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder in connection with a foreign currency trading scheme that raised at least $190 million from more than 1000 investors.

A few days ago SEC filed a motion against Cook that alleged, among other things, that Cook violated the Court’s asset freeze and receivership orders entered on November 23, 2009, by using an undisclosed credit card to make thousands of dollars of retail purchases and by failing to turn over assets to the Court appointed receiver, to repatriate assets held in foreign countries, and to produce an accounting of investor funds.

So will the investors see their money back any time soon? I sincerely doubt it. These procedures take ages and it seems that most of the money was already spent…