In case you haven’t been following this, allow me to briefly catch you up to speed.
Last week, the “prop firm” company My Forex Funds (myforexfunds.com) had all their assets frozen by regulators, for a list of violations alleged against them. This is as serious as it gets, because it means that literally overnight, the company is functionally out of business. Anyone trading accounts through them, has also had their ability to trade cut off.
We’re running a free webinar this Saturday, September 9 at 11:30am Eastern to look at the details, implications and alternatives for traders that have limited capital.
When you have some free time, I strongly encourage you to read the full complaint here and do your best to understand it, and see what parts of it will pretty clearly apply to the futures trading evaluation space. Here is a summary of the violations being aimed at them:
- Count I: Fraud in Connection with Retail Forex Transactions in Violation of Regulation 5.2(b)(1) and (3), 17 C.F.R. § 5.2(b)(1), (3) (2022)
- Count II: Fraud in Connection with Off-Exchange Transactions in Retail Forex and Retail Commodities in Violation of Section 4b(a)(2)(A), (C) of the Act, 7 U.S.C. § 6b(a)(2)(A), (C)
- Count III: Acting as an Unregistered RFED In Violation of Regulation 5.3(a)(6)(i), 17 C.F.R. § 5.3(a)(6)(i) (2022)
- Count IV: Acting as an Unregistered RFED Associated Person In Violation of Section 2(c)(2)(C)(iii)(I)(aa), 7 U.S.C. § 2(c)(2)(C)(iii)(I)(aa), and Regulation 5.3(a)(6)(ii), 17 C.F.R. § 5.3(a)(6)(ii) (2022)
- Count V: Off-Exchange Retail Commodity Transactions in Violation of Section 4(a) of the Act, 7 U.S.C. § 6(a)
Pretty serious stuff here. Now to be fair, retail Forex has always been a scam. I won’t get into all the ways it’s a blatant scam in this post, but it absolutely is. The futures trading evaluator space is not a scam (for the most part anyway, there are always “bad apples” which make exception) however, the industry does do a number of the very things MyForexFunds is being accused of.
The bottom line warning here, is that we believe it’s highly unlikely this will not spread beyond MFF. It will likely first spread to other Forex evaluators (if they don’t get wise and close up shop ahead of any investigation) and then… I can’t imagine the CFTC won’t decide to put the futures industry in their sights.
This could of course take months or even years to happen, so this may or may not be something urgently requiring action this moment. But for our part, we’re treading very carefully around these companies now, and reconsidering adding any additional capital via “funded” accounts.
It’s our opinion that if you are with a company who places traders into actual genuine cash accounts, paying professional CME fees, then you are more likely to be safe… but that’s not a guarantee of anything. We could see a significant shakeup of this industry in the future, so it would be wise to keep an eye on the CFTC vs. MFF case, to watch how it plays out.