NFA Hits I Trade FX – Another Look

The story is not new but is presented  from a different angle. It is view of someone who saw the I-Trade story and does not know a lot about David Smith. Call it as they would, from the outside looking in.

The NFA has just blown the lid off I Trade FX’s finances. I Trade FX has had a wild financial history going from $6,500,000 in adjusted net capital in March of 2007 to
$-3,000,000 in April of 2007 then up to an astonishing $34,000,000 by December of that same year. Last month the firm took a huge net capital drop down to $16,000,000. Who knows what it will be next month. But judging from this just released NFA BCC action against the firm we are beginning to get an inkling why the firm’s numbers are all over the place:

http://www.nfa.futures.org/basicnet/…14&contrib=NFA

First the NFA reveals this juicy little tidbit about I Trade FX’s customer base:

…the firm had approximately $10 million in customer liabilities and approximately 3,000 active customer accounts, though only nine of these accounts had more than $50,000 in equity.

For a firm that saw its net capital grow from a little over $1,000,000 in 2007 to $34,000,000 by the end of the year that is a TINY customer base. Only 3,000 accounts? Only NINE accounts with equity of over 50k? The firm is barely doing any business. So how did their capital figure grow to such a huge amount?

Answer per the NFA: David Smith

Who is David Smith? Well he is famous in Jamaica for starting a couple currency trading clubs (Olint Corporation & TCI FX Traders) that racked up huge profits. Only problem for Mr. Smith was that he neglected to register with Jamaican authorities and in 2006 they swooped in and raided his place of business seizing everything in sight. The raid was upheld by the Jamaican Supreme Court last year. The Government has yet to charge Smith with any crime and in the meantime he has shuffled on over to the Turks and Caicos Islands to await the outcome of the investigation: http://www.jamaicaobserver.com/magaz…S_TRADING_.asp

But while he was awaiting his fate in Turks and Caicos he continued to operate his Olint and TCI accounts at I Trade FX. And this is what has so concerned the NFA.

In 2007. when NFA got wind of the Cease and Desist order against Smith they asked I Trade FX to turn over Smith’s bank records since he was a principal in the firm. I Trade FX could not get Smith to comply and so they dumped him as a principal. But the NFA didn’t let the matter die there. They began digging through Smith’s trading activity at I Trade FX (particularly his Olint and TCI accounts). Examples of Smith’s activity cited by NFA included:

…NFA reviewed the activity in an account Olint opened with I-Trade in September 2006. The Olint account opening documents indicated Smith and his wife owned Olint and that the funds in the account came from them only. During the first two months this account was open, no trading activity occurred; however, during this time, Olint made four deposits totaling approximately $59 million and eight withdrawals totaling about $35.5 million.

Several more examples like this are cited in the NFA report including this one:

Between August 2006 to May 2007, Olint and TCI deposited almost $100 million into its trading accounts at I-Trade, but only a small percentage of these funds were used for trading purposes. By May 2007, Olint and TCI had withdrawn the vast majority of the funds from its I-Trade accounts. However, approximately $50 million of the funds which Olint and TCI withdrew were sent to JIJ Investments, a company owned by Martinez and his brother and father, Jacob and Jared Martinez (owners of I Trade FX).

What the NFA is charging I Trade FX with is failure to notify NFA of suspicious activities, not money laundering itself. But it does raise very troubling question about the people I Trade FX is associating with.

Radio Interview

I Trade FX responded in a radio interview in which they directly contradicted some of the NFA’s charges (Smith was only a minority shareholder according to I Trade FX.) But in one eye popping segment of the interview David Smith and I Trade are busted by the interviewer on the question of “why wouldn’t David Smith give the NFA his bank records?” I Trade FX claimed Smith’s lawyers felt NFA had no jurisdiction to ask for Smith’s bank records and so Smith declined.

Ten minutes later David Smith gets on the phone and states the NFA never asked him for his bank records and that I Trade gave NFA that response because Mr. Smith needed more time to put his records in order. Smith quickly back tracks when he gets called out on his original answer and in general gave a less than stellar performance.

This radio interview was just conducted at nationwidenewsnetwork.com and is a must listen:
http://boomp3.com/listen/byus88nrr_h…-investforlife

This is big news in Jamaica even if most people in the United States have no idea who David Smith and I Trade FX are. At the end of the interview the interviewer asks David Smith why customers of Olint aren’t getting paid their monthly returns. Smith has no answer and after an agonizingly long pause throws out that his “brokers” won’t give him the funds and he doesn’t know why. The credibility of David Smith crumbles by the hour and his constant references to himself in the third person in this interview only damage him further.

It may be that we have only touched the tip of the iceberg with this story so stay tuned as this investigation moves forward.

Source: http://www.fxstreet.com/forum/showthread.php?t=1005&page=18
(Posted with permission, author:forexscholar)

Related

May Daisy’s nothing explanation

May Daisy has just released the following information, that pretty much says things remains as they are. The cycles previously announced is no longer valid and there is no new timeline. There is no reference to the F1 investments issue.

Greetings Dear Partner,

CURRENT SITUATION
We regret to inform you that there has been an unfortunate and unforeseen turn of events. Our Brokers are currently addressing compliance issues that are impacting our ability to meet our scheduled payments. Our legal team is working assiduously to resolve these issues and have advised us not to disclose any details due to the delicacy of the situation.

We have therefore decided to temporarily suspend updating the cycles while we await further information that will help us to develop a clearer strategy on the way forward. Of utmost importance to us is our credibility and we recognize that this is closely linked to being able to keep any schedule we communicate to you. As we continue to monitor events, we will indicate when a breakthrough has been made. In the meantime, we will continue to keep the communication lines open with regular updates over the coming weeks.

Below we seek to further clarify some of your most frequently asked and anticipated questions:

1-When will the cycles be updated?
As soon as the situation is resolved and we are able to proceed with the payments we will update the cycles.

2-When will payments resume?
Payments will resume as soon as the situation is resolved. We are unable to put a timeframe on this now but will keep you posted.

3-I have an emergency situation and need some funds, can I be helped?
At this time we are unable to process any payments at all. However once the situation is resolved we will place priority on these cases.

4-Will gains be posted to the accounts?
During this period of inactivity no gains can be awarded.

5-Who has my money?
All funds collected are in the custody of MayDaisy. All our members have access to our website; once your funds have been received, it is reflected on your account on the site, indicating that MayDaisy has full responsibility for those funds, which are then being traded. The Agent/ Representatives are not responsible for your funds once your account has been updated.

6-My cheque was made payable to MayDaisy but I do not have access to the website?
All our members have access to the website and we have no third party arrangements.

7-Why does Maydaisy take so long to update us?
Our practice has been to publish a monthly Communigram to our members. In light of your feedback though, we have decided to increase to a bi-weekly update.

8-Why does the Communigram not include details like other clubs?
Each club is poised differently and therefore can divulge different degrees of detail. We are guided by our legal team and seek always to protect our members as much as possible.

1 John 4: 7-8
Dear friends, let us love one another, for love comes from God. Everyone who loves has been born of God and knows God. Whoever does not love does not know God, because God is love.

n.b. As usual thanks to the person(s) that provided us with this information.

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