Despite the ongoing worldwide purge of the FX industry’s less than savory individuals by government authorities and regulatory organizations, the occasional trickster is still apparent, it seems. Today, the lid was lifted on Phoenix Forex’s somewhat controversial OakFX scheme and its perpetrator, Mark Brewer.

Mr. Brewer, according to a report by New Zealand national news organization, the Sunday Star-Times, had used aggressive techniques and foul language in sales meetings within Phoenix  Forex  Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a country’s currency to fluctuate in value in relation to another currency – this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990’s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a country’s currency value. Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a country’s currency to fluctuate in value in relation to another currency – this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990’s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a country’s currency value. Read this Term, and pressured sales staff into selling the product under any circumstances. According to a recording of the meeting obtained by the Sunday Star-Times, Mr. Brewer used expletives and told his colleagues: "You can go and give them a f...ing reacharound, mate, I don't care. Be creative. Get the deal done, now. Take the money, now”.

Mr. Brewer went on to say that the OakFX "package" was "special," the product was "good," and included a 30-day money-back guarantee and free iPad. "We're offering something special in order to close them. Not everyone gets an iPad all the f...ing time," he said.

Just last week, Forex Magnates reported that the New Zealand Financial Markets Authority (FMA) had issued a warning to the public that this particular scheme promised unrealistic returns, contained misleading information and potentially could be intending to dupe prospective clients into investing in what is effectively a form of a  Ponzi Scheme  Ponzi Scheme A Ponzi scheme is a scam that looks to lure investors, ultimately paying profits to earlier investors with funds from more later investors.This form of fraud tricks victims into believing that products are instead generated from product sales or other means. In actuality, most investors are completely oblivious to the actual origin of incoming funds.One of the central attributes of a Ponzi scheme is the necessity of its ongoing nature, which is dependent on a steady flow of new contributions and funds. This can unravel quickly should investors request or demand repayment or lose faith in whatever assets they are supposed to own.While earlier episodes of this scam were carried out historically, the name Ponzi scheme is associated with Charles Ponzi in the 1920s.His original scam was based on the legitimate arbitrage of international reply coupons for postage stamps. This eventually gave way to diverting new investors' money to make payments to earlier investors and to himself.How to Identify Ponzi Schemes?Like any scam, Ponzi schemes follow a few basic trends that investors should be mindful of. A healthy amount of skepticism in regards to investing should always be present, which should help identify ways that scams look to market themselves.For example, Ponzi schemes almost always require an initial investment and promise above average returns. This also includes purposely vague or arbitrary terminology to help confuse more novice investors. This fraud is riddled with mentions of "high-yield investment programs", "offshore investment", or “guaranteed returns”.Any sort of investment opportunity should always be analyzed and researched. In the modern era, many tools are available to identify scams or fraudulent operations.Regulators in most jurisdictions are constantly policing against these forms of market abuse and it is important to check these registers before actually investing in dubious opportunities. A Ponzi scheme is a scam that looks to lure investors, ultimately paying profits to earlier investors with funds from more later investors.This form of fraud tricks victims into believing that products are instead generated from product sales or other means. In actuality, most investors are completely oblivious to the actual origin of incoming funds.One of the central attributes of a Ponzi scheme is the necessity of its ongoing nature, which is dependent on a steady flow of new contributions and funds. This can unravel quickly should investors request or demand repayment or lose faith in whatever assets they are supposed to own.While earlier episodes of this scam were carried out historically, the name Ponzi scheme is associated with Charles Ponzi in the 1920s.His original scam was based on the legitimate arbitrage of international reply coupons for postage stamps. This eventually gave way to diverting new investors' money to make payments to earlier investors and to himself.How to Identify Ponzi Schemes?Like any scam, Ponzi schemes follow a few basic trends that investors should be mindful of. A healthy amount of skepticism in regards to investing should always be present, which should help identify ways that scams look to market themselves.For example, Ponzi schemes almost always require an initial investment and promise above average returns. This also includes purposely vague or arbitrary terminology to help confuse more novice investors. This fraud is riddled with mentions of "high-yield investment programs", "offshore investment", or “guaranteed returns”.Any sort of investment opportunity should always be analyzed and researched. In the modern era, many tools are available to identify scams or fraudulent operations.Regulators in most jurisdictions are constantly policing against these forms of market abuse and it is important to check these registers before actually investing in dubious opportunities. Read this Term.

The New Zealand FMA's statement expressed that "In FMA's experience, it is highly unlikely that this kind of investment can deliver such high returns. Phoenix Forex has not been able to provide any evidence to support its claims of having achieved these returns. Further investments of this nature carry a high risk of loss of some or all of an investor's capital, and losses can exceed the amount of the original investment. The warning recommended that investments promising unusually high returns, are often not legitimate offers.

Therefore, the New Zealand FMA urged caution by anyone considering dealing with Phoenix Forex. New Zealand, until recently a jurisdiction with a very light regulatory framework, has made continual efforts to align its laws with those of other nations in the region with developed financial markets economies, and under the leadership of CEO Sean Hughes, the FMA has grown into a fully-fledged regulatory authority with a set of parameters and penalties for those who seek to transgress.

At the time of this meeting, Mr. Brewer was an undischarged bankrupt, which although not illegal unless a director of the company, indicates that he had little to lose and a lot to gain at the expense of unsuspecting investors. The OakFX scheme is aimed at senior citizens and boasts of 50 per cent returns from its trading software packages, costing up to $25,700 in license fees, which according to the New Zealand FMA is unrealistic and not supported by evidence.

Sales Legend Used Unsavory Tactics

Mr. Brewer, whose Linkedin profile describes his profession as “Sales Legend” and that he obtained his education from the University of Hard Knocks from 1974 to 2012, is due to be sentenced next month following a guilty plea to managing the Intervest Global (NZ) business while bankrupt.

The type of tactics used in order to peddle the OakFX scheme are not new to Mr. Brewer. His activities at Intervest Global involved selling expensive software packages purporting to allow investors to reap massive profits. Intervest's Trilogics package which sold for $23,200 promised investors the ability to make a profit from gambling on horse racing.

In 2010, Intervest Global's Australian parent was forced by the Australian Competition and Consumer Commission to sign an undertaking promising to withdraw untrue advertising. Subsequently, it was argued by the company that it was a software distributor, and therefore, not subject to financial services regulations. Intervest Global’s advertisements promised investors guaranteed earnings of more than $50,000 after the purchase of a $23,200 software package allowing large-scale gambling on horse races. During his tenure at Phoenix Forex, Mr. Brewer generated further forceful tactics which were designed to pressure investors into handing over their money.

He explained to sales staff in the recorded meeting that they should “be creative" if the iPad pitch didn't appeal to a potential investor and provided a suggested response: "If you don't want it, we'll give it to Starship [children's hospital] for you. We'll engrave your name on the back, and give it to the cancer kids to play Monopoly on. How does that sound?"

Hiring and Firing

Questions sent to Mr. Brewer and Phoenix Forex executives and shareholders by the New Zealand press were answered in a written statement by Kendall Twigden, the company's sole director and majority-owner. She said questions about Brewer's role amounted to a "witch hunt" and he was employed by the business as a "senior salesman".

Several former Phoenix Forex staff said Mr. Brewer exercised hiring and firing authority, but Ms. Twigden said: "I managed the business and am ultimately responsible for hiring and firing staff." A spokesman for the Official Assignee, who prosecuted Mr. Brewer for his activities with Intervest Global, said the Official Assignee was aware of his involvement in Phoenix Forex. "We are aware that he may have been involved in the management of that company. However, as he was already found guilty of management of a company while bankrupt, he can't be prosecuted again for the same thing."

Subseqently, Ms. Twigden and Mr. Brewer have returned to their rented $4 million beach front property at Milford on Auckland’s North Shore, overlooking the Hauraki Gulf.

Quite clearly, whilst indeed these tactics are not sustainable long term, due to regulators unearthing them and bringing them to light, as well as exercising enforcement proceedings on their perpetrators, there are still such schemes in the midst. For this reason, the regulatory scope is increasing continually, and more firms with unpleasant intentions are likely to feel the long arm of the law.

A special report detailing the regulatory surveillance systems used in the Asia-Pacific regions will be included in the forthcoming Forex Magnates Quarterly Industry Report for Q3 2013.