A financial services firm that claimed to offer near-zero pricing before the mainstream has suffered a major hit taking it into the minuses. CollectiveFX, a Belize-based entity offering FX trading on the popular MT4 platform, has recently shut down its systems and is unreachable. The FX broker formerly held authorisation under the Belize financial watchdog, the International Financial Services Commission of Belize. The move signifies the vulnerability the FX industry faces under the current operating environment.
The broker is believed to have started its crumble in May this year, details show that the broker informed clients that it was undergoing ‘changes’ and withdrawals would take up to ten to fifteen days to process. Although clients raised alarm bells, several were unaware of the prospective problems that were to occur.
One trader who remains anonymous explained to Forex Magnates: “I only checked my account the other day, which does not work now, it was fine a couple of weeks back.” The trader mentioned that he has over $1.5 million held at the brokerage firm.
A number of traders who hold accounts at the brokerage firm, notably a trader known as Dewey McG, has launched an online initiative to recover his funds. The trader states that he will issue a civil lawsuit against the firm and its owners.
CollectiveFX founders include Gary Slingo. The firm was formerly based in the United States, however after CFTC rulings it set up in the Central American nation of Belize as a regulated broker-dealer, under the name of BDG Financial Services Ltd.
No Longer Registered
The Belize authorities issued a notification on their website on the third of June stating that BDG Financial Services, aka the CollectiveFX Global, was no longer registered as a licensed firm by the watchdog. The official notification states: “It is notified for general information that BDG Financial Services Ltd., operating under the trading name of “The Collective FX Global”, is no longer licensed by the International Financial Services Commission of Belize (IFSC) for trading in foreign exchange or to engage in any other international financial services. The Company’s licence had expired on 31 December, 2013.”
What to Look for in a Forex Technology Provider?Go to article >>
Although the firm had lost its license in December 2013 it was still operating and functioning as per normal until May, however investors raised their concerns after they found several delays in response from staff.
At the latter stages of May, CollectiveFX issued an email statement to its clients explaining that it was terminating its operations. The firm reasoned that an unprofessional white label had caused a number of issues, the note stating: “Over the last several weeks we have been dealing with the consequences of a ’trading agent’ who has essentially operated their business as a White Label of the Collective FX Global.
The way that this company has conducted trading on behalf of its clients and the false and misleading representations that this company has made about its trading system, performance, risks etc. is the subject of several regulatory investigations. Whilst only a ‘middle man’ in this scenario, we need to ensure that we are fully protected and that we and our members are not entangled in any possible fallout of the investigations. As such, we have taken the decision to close the CollectiveFX Global immediately.”
The notification stated that all positions would be closed out, however one trader explained: “Systems appeared intact (till last week) and I only found about the issue when I tried to contact my account manager to withdraw money.” The state of affairs are confusing for the lay person as the firm is believed to have terminated operations in May/ June, however certain traders were led to believe it was ‘business as usual’.
As it stands, CollectiveFX’s team, founders, office, website and contact details have all disappeared off the face of the earth, believed to be in a warp bubble in space, thus forcing disgruntled investors to go on ‘Red Alert’ and start exploring ways to recuperate what belongs to them.
The fact that CollectiveFX no longer holds any regulation under the Belize authorities makes regaining client money more difficult. Forex Magnates’ team is continuing its investigation into the matter and will report details accordingly.
FX and CFD trading have come a long way since early days, pre-millennium, brokers and regulators are now more sophisticated and appreciate rules and guidelines that make an efficient marketplace. The current scenario highlights the importance of the regulatory framework and how organisations such as the Financial Conduct Authority in the UK offer a level of protection to retail investors that gives them some comfort in troubled times.
The International Financial Services Commission of Belize was unavailable for comment.