In a swift and resolute move, regulatory authorities in the United States and Canada have cracked down on My Forex Funds, a prop trading firm, amid allegations of a staggering $310 million scam. The Commodity Futures Trading Commission (CFTC) in the United States and the Ontario Securities Commission (OSC) in Canada wasted no time in pursuing legal action against the alleged wrongdoers.
Charges Against the Operator
At the center of this regulatory storm is Murtuza Kazmi, the operator of My Forex Funds, who also helmed two companies: New Jersey-incorporated Traders Global Group Inc. and Canada-based Traders Global Group Inc. While both regulators have named Kazmi, the CFTC has gone a step further by targeting both of Kazmi’s companies, whereas the Canadian regulator has chosen to focus solely on the Canadian entity alongside Kazmi.
Misleading Promises and Deceptive Practices
According to the CFTC, My Forex Funds enticed retail customers with promises of becoming “professional traders” by trading with Traders Global’s capital against third-party “liquidity providers,” sharing trading profits. However, what appeared as a lucrative opportunity was allegedly marred by deception. The CFTC asserts that Traders Global acted as a counterparty to nearly all customer trades, rather than a liquidity provider, contrary to what the platform conveyed.
Allegations of Manipulation and Misconduct
Last Friday’s regulatory announcement painted a troubling picture of Traders Global’s alleged misconduct. The platform is accused of minimizing the likelihood of customer profitability by employing tactics to terminate customer accounts under false pretenses. Furthermore, it is alleged that the company misleadingly imposed commissions to diminish customer account equity. In a shocking twist, the company purportedly utilized manipulative software to execute customer orders at unfavorable prices. Only a select few were dubbed “successful customers,” ostensibly aimed at reducing customer profits while amplifying losses.
Luxury Lifestyles Funded by Fraud
With over 135,000 customers enrolling in its trading program since November 2021, My Forex Funds reportedly collected at least $310 million in fees. Shockingly, it is alleged that Kazmi used these ill-gotten gains to indulge in a lavish lifestyle, acquiring luxury homes and automobiles. Furthermore, he stands accused of transferring tens of millions of dollars into his personal accounts.
Legal Charges and Freezing of Assets
The CFTC’s complaint has leveled charges against the defendants for “fraudulently soliciting customers to trade leveraged, margined, or financed retail foreign exchange (retail forex) and leveraged retail commodity transactions.” Meanwhile, the OSC has emphasized violations related to fraud, unregistered trading, and the illegal distribution of securities. Kazmi and his Canadian firm are not registered in Canada.
In the United States, the CFTC secured a statutory restraining order from the court, effectively freezing the assets of Kazmi and his two companies. This order also mandates the submission of books and records for scrutiny by the regulator, in addition to the appointment of a temporary receiver.
Response from the Platform
In response to these crippling legal actions, My Forex Fund’s website now displays a notice of service termination. The company is unable to provide any services as its assets remain frozen.
The website notice states, “Yesterday we learned that, without prior notice or discussion, a provincial securities regulator in Canada and the commodities regulator in the United States issued orders preventing us from trading securities or accessing funds in our bank accounts. Until these freeze orders are lifted or modified, our business is effectively, and at least temporarily, frozen as well.”
The company intends to engage with regulators to address their concerns. A court date to determine the fate of the freeze orders is scheduled for September 11 in the United States, with another hearing scheduled later in the same week in Canada.