Looking for some advice on fraudulent broker

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Old Aug 8, 2017, 11:04pm   #1
 
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Joined Aug 2017
Looking for some advice on fraudulent broker

Any help or advice would greatly be appreciated.

I have a friend who came to me wanting to start trading. (I've been trading for years)

I told him to make sure he opens his cfd/spread betting account with a UK firm registed with the FCA. He didnt listen and opened a cfd account with a Cyprus based company.

He deposited 10K with them and started trading with an "account manager", After a few days trading he gave me a call and asked to come see me. They were trading with full 5 lots with multiple positions but managed to be up 5k by the time he came to see me.

I told him to close the account and take the money. He was trading far to large and was just a matter of time for his account to lose the lot. He did close the positions he had on before he went home.

About 2 weeks later I got a call from him in distress and learned that he deposited another 27K which he couldnt afford to lose and was down 22K from the 37K deposited. He had some luck during the 2 week and was up 40k at some point before losing it all and more.

It turns out the account manager was talking him in to making these big trades, he got a call after he started losing his original 10k that he need to make a 22k deposit to hedge and save his account. After depositing the money and trading heavy again, after the loses piled up he was told to deposit 50k to save his account.He thankfully doesnt have the money, the account manager said go get a bank loan. (unbelievable!)

After telling me all this he agreed to withdraw the 15k left (which is in progress) and I told him to download an app to record phone calls. I've listened to this guy and my friend is definately being defrauded.

The company is registed with the FCA but has no address here so suing them will be difficult I think.

Can I ask what should we do?
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Old Aug 14, 2017, 10:49pm   #2
 
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Quote:
Originally Posted by crkscotland View Post
Any help or advice would greatly be appreciated.

I have a friend who came to me wanting to start trading. (I've been trading for years)

I told him to make sure he opens his cfd/spread betting account with a UK firm registed with the FCA. He didnt listen and opened a cfd account with a Cyprus based company.

He deposited 10K with them and started trading with an "account manager", After a few days trading he gave me a call and asked to come see me. They were trading with full 5 lots with multiple positions but managed to be up 5k by the time he came to see me.

I told him to close the account and take the money. He was trading far to large and was just a matter of time for his account to lose the lot. He did close the positions he had on before he went home.

About 2 weeks later I got a call from him in distress and learned that he deposited another 27K which he couldnt afford to lose and was down 22K from the 37K deposited. He had some luck during the 2 week and was up 40k at some point before losing it all and more.

It turns out the account manager was talking him in to making these big trades, he got a call after he started losing his original 10k that he need to make a 22k deposit to hedge and save his account. After depositing the money and trading heavy again, after the loses piled up he was told to deposit 50k to save his account.He thankfully doesnt have the money, the account manager said go get a bank loan. (unbelievable!)

After telling me all this he agreed to withdraw the 15k left (which is in progress) and I told him to download an app to record phone calls. I've listened to this guy and my friend is definately being defrauded.

The company is registed with the FCA but has no address here so suing them will be difficult I think.

Can I ask what should we do?
Hi crkScotland,

As it happens I am in Scotland all this week. Let me know how this chapter turned out and what advice your friend took from you - if any. After all, he didn't (to be fare) listen to you when you advised to open an account with a UK firm that is FCA registered and he didn't listen to you again when you advised him to discontinue trading with the unregistered broker, to the contrary he deposited even more money and for the 2 weeks he was making, do you believe for one moment he was agreeing with you or do you feel more realistically that he was thinking you were wrong, he was right and you were spouting a load of bo11ox?

You're still trying to help him but what makes you think he'll listen this time round. Rather than trying to save his money I would personally save my time and not bother. Cruel I know but Fool me once and all that. As (stated by you) you have been trading for years I would take this as a personal slap in the face. Why bother to help those who do not listen.

The short of it is this: If the broker is an advisory broker then little you can do but if the broker is execution only then you could have a case. The next step is to discuss how much your friend wants to throw at solicitors that will tell you, 'you have a case', and follow this through burning more capital and a lot of time to possibly and at the very best, get some recompense.

Personally my advice would be to throw this one down to experience and hope that next time your friend actually listens to his friend (you) and also carries out his own due diligence. Trading is risky enough without the pitfalls of listening to your broker who obviously has a vested and biased interest in the client opening trades and depositing money. Worst still, not listening to your friend who has traded for years and going against their advice and still expecting them to be at their beck and call when the sh1t hits the fan.

Lee
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