For those who don’t know: Martinez family is behind Market Traders Institute, was involved with former FCM called I-Trade, which then became eForex, and was heavily linked to the David Smith and Olint Ponzi case. They are also rumored to be behind one of the new RFEDs.
As if this wasn’t enough Jacob Martinez was apparently running an NFA registered IB called FX Currency Traders (FXCT) until September 2011 and has introduced over 4000 accounts to FXCM US and UK in the past 3 years.
According to the NFA complaint Jacob Martinez was president of both Market Traders Institute (MTI) and FXCT – those two firms also sharing same office. De facto Market Traders Institute was introducing accounts to FXCM through FXCT without clients knowing about this relationship and without MTI being registered as an IB with the NFA.
The case becomes even more interesting when NFA describes the relationship between MTI, FXCT, eForex and FXCM:
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“FXCT’s failure to supervise was especially egregious in regard to a firm called Eforex. From 2009 until early 2011 , Eforex operated as unregistered forex IB located in Panama. Martinez had been a director of Eforex at one time and his brother I. Martinez was Eforex’s president. As of January 2011, Eforex maintained the two largest accounts at FXCT with a combined balance of over $2 million. FXCM UK was the counterparty for these accounts.”
It’s pretty safe to say that this NFA investigation prompted Eforex to transfer its clients to Ava Forex.
On October 17, 2011, NFA issued a Complaint charging FXCT with doing business with a non-Member that was required to be registered as an IB but was not so registered; failing to supervise Market Traders’ promotional material; failing to conduct adequate due diligence to determine whether entities with which the firm conducted business were required to be registered with the CFTC and NFA Members; and failing to keep accurate financial records, maintain required minimum adjusted net capital, or observe high standards of commercial honor and just and equitable principles of trade. The Complaint also charged FXCT, Martinez and Farr with failing to supervise.