* Forex giant says it is victim of ‘abusive trading’ *
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IronFX, billing itself as the “award-winning global leader in online trading”, seems to have fallen victim of its own grandeur with the Cyprus regulator saying the firm is under investigation following a number of complaints.
The announcement follows growing rumours of wrongdoing and default, some stretching as far as to suggest that the firm had been duped by agents in China who robbed the company causing serious liquidity problems, while the inability to pay traders who wanted to cash-in on their accounts launched several facebook pages, twitter conversations and a public petition to have its license suspended.
The Limassol-based company responded by saying it was the victim of “abusive trading” and that it, too, was investigating a number of clients who had “breached the terms and conditions of their trading agreement.”
It did not elaborate on the alleged breach, but experts suggest it may have to do with the stricter back-door security system introduced to repel abusive traders, as a result of which other trading accounts may also have been affected.
The “abusive trades” refer to clients wanting to withdraw their initial bonus and transferring that amount to a fresh trading account to create a larger margin for trading.
A senior official said that the forex firm had recruited “overseas experts” to help investigate these abuses and was seeking legal advice on how best to proceed.
“There has been no wrongdoing on our side,” said Yan Mai, Chief Marketing Officer at IronFX Global Ltd.
The complaints, 68 of which have been received by the Financial Mirror in the past week alone, follow claims of non-payment of their earnings, bonus or both, with most of them dating back to February this year.
The Cyprus securities watchdog issued an announcement saying there is an “ongoing investigation” into the matter. However, the Financial Mirror has learned that the investigation too dates back to February, while the probe is expected to be concluded in about three months.
The announcement said that “as a consequence of media reports and the increasing number of complaints submitted by investors against the Cyprus Investment Firm IronFX Global Ltd., the Cyprus Securities and Exchange Commission wishes to clarify that there is an ongoing investigation against the CIF with respect to possible infringements of the Legislation. Upon completion of the investigation, the CySEC will publish its findings and/or will proceed with further announcements in the meantime, if deemed necessary.”
It added that “CySEC examines the complaints submitted to it by investors, against any supervised entity, in the context of its statutory mandate. For complaints against CIFs that relate to possible compensation claims, the investors are encouraged to contact the Financial Ombudsman, which is the competent body to examine compensation claims via an extrajudicial procedure, at [email protected] .”
CySEC officials say this is not the only investigation underway, as other are also pending while fines have already been imposed on trading companies that do not conform with the licensing rules.
The Financial Mirror has seen copies of contracts whereby traders had agreed to the terms and conditions which include not receiving their sign-in bonus. The payment in some cases has even been zero.
The claims by clients demanding payment range from EUR 2,000 to 26,000, up to USD 39,000 and GBP 9,000, with many coincidentally from Poland.
The non-payment of bonuses has also sparked angry comments on the Internet and social media, some raising serious concerns about liquidity issues, while others ask why the company has not yet posted its 2Q results for 2015, whereas its peers already have.
The petition, posted on http://www.devisen-traden.de has been created “to help a large amount of #IronFx clients whose withdrawal requests have been pending since months.”
The organisers say that the petition to suspend the CIF license of IronFx “is being automatically sent via email to the CySEC, to major regulators (FCA, BaFin, ASIC, Hungary, Malaysia, Dubai) and to the ESMA. The suspension of the license does not mean the withdrawal of the license. The company has usually 15 days to comply with the provisions, which imply the return of clients’ funds if the client so wishes.”
In a statement, Yan Mai said that “the company has identified a group of abusive traders that followed an abusive trading strategy to manipulate our promotions. This group has been placed under investigation for breach of our trading terms and pending this investigation we have put a limitation on all promotions-related withdrawals from this abusive trading strategy as we are entitled to do. This investigation is ongoing and upon completing, the findings will be announced to the relevant persons. Please note that we undertake a formal internal process to identify the level of abuse, if any, and the amount that is eligible for withdrawal. The first set of investigations related to formal complaints has resulted that only 6% of the accounts have an available balance to withdraw. The rest of the accounts have no available balance as a result of the abuse.”
The latter zero-balance is the payment that clients are claiming.
The IronFX statement added that “there are particular claims that have no merit and are simply defamatory. Instead of providing facts and following the prescribed route to lodge a complaint via the regulator, they have instead chosen to follow a strategy of defamation via social media or public websites in order to force the company to give money to clients who have no merit in their claim given that they have clearly violated the terms and conditions of our product offerings.”
It added that “the company is undertaking the process as prescribed above once it receives formal complaints and presents its findings to the client together with the relevant regulator. Once this is done, it is considered as final settlement and the remaining pending withdrawal for the client is cleared.”
IronFX said that it is regulated by six regulatory authorities globally (FCA in the UK, ASIC in Australia, DFSA in Dubai, FSB in South Africa, UCRFIN in Ukraine and CySEC in Cyprus) and that “to-date no warnings or fines have been received.”
“The CySEC announcement is a standard announcement relating to our internal investigation of the abusive trading by clients in breach of our terms and conditions. We welcome the investigation that will prove there is no wrongdoing on behalf of the company and will put an end to the defamatory claims being made against the company. We have been working closely with CySEC to assist them and to date we have received no indications of wrongdoing. We have obtained several legal and expert opinions supporting our actions to date.”
There is also a “closed group” of IronFX “clients” on facebook, numbering just over 500, which is described as “No-profit platform of damaged IronFx clients with pending withdrawal requests. We are no IronFx representatives.”
