AFX Group’s sordid slide into oblivion is not the end, not by a long way

For most regulated industry sectors, be it food, tourism or healthcare, flagrant attempts to run roughshod over the correct way of doing business would result in immediate censuring and in many cases, prosecution and coverage on evening news programs. Not in the retail FX sector. For over two years, AFX Group’s absolute disregard for correct […]

For most regulated industry sectors, be it food, tourism or healthcare, flagrant attempts to run roughshod over the correct way of doing business would result in immediate censuring and in many cases, prosecution and coverage on evening news programs.

Not in the retail FX sector.

For over two years, AFX Group’s absolute disregard for correct conduct has been allowed to prevail, even after the exposure of the firm’s duplicitous attempt to masquerade as a Prime of Prime broker, when all the while it was profit sharing with a firm that it caused the demise of.

The FX industry airwaves have been awash today with revelations that AFX Group’s FCA license is about to be cancelled following a notification on the website of its subsidiary Super Trading Online (STO) which states that customers in the UK have until August 7 to close all positions.

This comes just a few weeks after Cyprus regulator CySec suspended AFX Group’s license, however if anyone is considering this to be the death throes of AFX Group, a surprise may well be in store.

FinanceFeeds has gathered a vast amount of information over the past few years concerning the business activities of AFX Group, including its profit sharing antics which were a massive contributing factor to the demise of Gallant Capital Markets, and a cause of many brokers who genuinely thought they had a prime of prime agreement with AFX Group being unable to withdraw their client funds.

Upon investigating the firm’s business two years ago, we were met with a barrage of calls from unrelated parties all over Cyprus, attempting to silence the publication of the facts, however our research was absolutely right, as confirmed by a law suit in New York one year later by Esther Du Val, Chapter 11 Trustee for the estate of Gallant Capital Markets and Avenica.

Many industry executives have been affected, however it is opinion from where I sit that this is not the end of AFX Group quite yet.

It is entirely possible that AFX Group may well concede to the regulatory license suspensions that it now faces, and then simply operate its Cyprus office as normal without regulation and bring customers in from an offshore entity. Many firms do that and have been doing so for years. When I asked Demetra Kalogerou, Chairman of CySec, why this is allowed, she had no idea what I meant. 

And of course, license suspensions can easily be overturned.

Thus, AFX Group may attempt to make hay whilst the sun shines and layer its operations in order that it can liquidate its regulated entities and operate offshore, thus rendering any regulatory censuring or attempts by Ms Du Val absolutely worthless.

Dissent is widespread. Today, an institutional FX executive in the Mid West of the United States told me “It’s guys like that who wreck it for the little guys trying to do it right.”

“If they are made bankrupt they won’t have to pay their debts, and if the go offshore they’ll carry on as they did before with literally no recourse for any customers” he said.

“This is the biggest scam since Fortress, and until now, you were the only one covering it” said this particular FX industry leader.

FinanceFeeds also found that some of the institutional FX sector’s consultancy orientated firms and liquidity comparison sites have removed AFX Group’s QUANTIC AM asset management division from their listings today.

AFX Group had enlisted his ‘services’ at a very high monthly cost in order to generate live leads and conversions to attempt to cover their gap. Companies operating within the bounds of a proper commission business and not lead marketing/churning would not resort to such desperation.

QUANTIC AM is an institutional portfolio manager like John Lennon is an acrobat. It is simply a branch of AFX which is a retail B book brokerage which has stepped one step too far, however AFX Group has got away with it.

All that has happened is that CySec has suspended its license, and the Financial Conduct Authority (FCA) may or may not follow suit. STO’s notice on its site is self-generated, it is not by command of the FCA.

So what? Two licenses, one probably temporarily suspended until some money changes hands in Cyprus, and another totally unaffeced. This does not mean that AFX Group will not shapeshift and morph into a Cyprus based British Virgin Islands firm which does its business in the APAC region on its existing networks there.

One particular executive told me today “It has taken two years for their license to be suspended, at last some justice.”

This is not justice, it is cursory administration and therefore does not draw a definitive line under it.



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