Mercer FX pump and dump scheme exposed

Mercer FX pump and dump scheme exposed: We detail exactly what happened

We detail exactly what happened and how clients were manipulated into funding accounts using tactics of bogus profits, disappearing trades and new Mercer FX coined phrase: the “Hedge.”

Despite there being a wider choice than ever with regard to good quality electronic trading companies with which retail FX traders can experience the most advanced technology, best execution and most direct and liquid market access, there are still retail clients that fall foul of some nefarious and cleverly orchestrated schemes that ultimately bilk unsuspecting investors of their hard-earned monies.

Even astute and educated members of the public, believe it or not, can be affected.

During the last few weeks, FinanceFeeds has been following the sudden departure of Mercer FX, which intentionally took its website offline opting for a loading screen that has been coded and installed server side, giving traders the impression that there was a connection problem, which was a complete red herring.

A few months ago,  FinanceFeeds reported that the company had been the subject of a series of complaints to the New Zealand FMA containing allegations of fraudulent practices which date back to 2014.

Following our investigations, it has come to light that, despite former executives and key figures having put their cases to FinanceFeeds, a whole different circumstance exists compared to the picture painted by Mercer FX’s owners.

When contacted by FinanceFeeds, Mercer FX CEO Jake Amar maintained he sold the company to an individual who goes by the name of Ashok Ashok (real name Matthew Ashok Kumar).

Before allegedly purchasing Mercer FX, Mr. Ashok  Kumar was known as Thomas, an FX trainer who held seminars in various regions in order to onboard IBs to Mercer FX. His parlance and style was a matter of force and bravado over function, and his delivery powerful yet lacking in technical detail.

Mr. Ashok Kumar denies any sale transaction, explaining to FinanceFeeds that a document showing the sale of the company to him was a forgery, and that he has no knowledge of such a transaction.

The practice by which the company attracts traders was a dubious one, and following these incoherent statements from Mr. Amar and Mr. Ashok, FinanceFeeds conducted a more detailed investigation.

According to the New Zealand authorities, one of the practices used by the company was that client monies quickly get “traded” and used up becoming a loss in which they then request more money from the trader with threats of losing the account and larger losses if the trader does not front up.”

The statement by the regulator added that withdrawing the money was also very difficult and the “broker” could become quite aggressive. But once the client suspected to be involved in illegitimate business, the broker then claimed that it was going through a business merger or that the previous account manager has been terminated and is under investigation for fraud. However, the same pattern of behavior continued regardless of any new manager.

FinanceFeeds has now been in contact with several former clients of Mercer FX, whose experience verifies this somewhat.

According to clients that FinanceFeeds spoke to, Mercer FX would call clients asking for deposits of $10,000 to $15,000 which would then be placed in managed accounts.

If this amount was not available, Mercer FX sales staff would then convince them to start small and say that they can fund it more as the account grows, which often resulted in a deposit of between $1,000 to $2,000 with the client having access to the account as well as the portfolio manager.

Mercer FX then ensured that trading accounts appeared to make a lot of money under their managed account schemes, in a very short space of time, in some cases up to $15,000 profit in a matter of just a few weeks. This drove investor confidence, and made for easy further attempts by sales staff to push clients to invest more money.

The psychological effect of this practice is that traders believe that they are onto a massive winner and then go to extreme lengths to continue to fund their account, in some cases taking out loans that they can ill afford, unaware that there is no live market, that the trades and profits are fabricated because no orders are being submitted to any liquidity provider, nor is there any such portfolio manager generating the profit that is indicated on the trading platform.

Instead, the internal dealing desk ensures that the trading account appears to be profitable to such an extent that the client feels compelled to continue to deposit.

A new kind of “Hedge”- the new buzz word

Once a few deposits have been made and some substantial profit has been generated, Mercer FX then opens trades that are exposed to very large losses, which then results in a call to the client by a sales person to request from the client what Mercer FX refers to as a ‘hedge’.

When asked what a hedge is, Mercer FX would explain that it frees up leverage to trade with.

At that point, fearing losses and having seen what ‘profit’ had been generated from the original investments, clients often then deposited more money, between $500 to $1,000 and the losing trade was then closed, with the balance staying the same as prior to the losing trade. In essence, the client was shown that by depositing funds in order to ‘hedge’, the ‘losing’ trade had been deleted.

When asked what had happened to the trade, sales staff would explain that a mistake was made and that any losses would be covered from the fund manager’s own pocket.

Once the relationship with the client had gone this far, Mercer FX resorted to tactics that would aim to mitigate any potential lack of confidence. They had already tried to take deposits to show a large profit from managed accounts, then had already exhausted the ‘hedging’ route, so at that point, a third trick was up their sleeve.

Clients were contacted, with Mercer FX explaining that “management is making it hard and does not want us to trade on your behalf unless you deposit the minimum amount $10,000 to $15,000″.

This practice was undertaken regardless of their account balance had been maintained at amounts well above the required initial deposit and required “minimum account size” in some cases well over $50,000, which was shown on the trading account. Sales staff and account managers would require the investor to deposit the remaining amount to get to the initial “required deposit”’.

At this point, withdrawals were not allowed as Mercer FX claimed that agreements stated that clients cannot withdraw for 1 year or forfeit all profits and the exit fee would leave them in minus which meant they’d owe the company. This reiterates FinanceFeeds advice to retail traders to always read terms and conditions before opening any trading account.

Once this point has been reached, it is likely that clients will begin to feel remorse, or suspect that they are not likely to be able to withdraw, and in a firm which makes its profit from a client’s loss (illegal in most regulated jurisdictions, as is executing traders on retail client accounts by brokerages on their behalf), Mercer FX had another method of extracting yet more money from customers.

Mercer FX would then contact clients who have been through this initial ruse, and then, using the strategy of opening a large trade with zero equity, this would put the client in a position to receive anothe “we need to do a hedge- put more money in” call. The trade would be deleted but and no “hedge” would be opened.

During the course of this, staff would make themselves unavailable and various smoke screens were placed in the way of clients, with Mercer FX telling clients that staff had changed, and each portfolio manager trades funds in accordance with their own set of requirements.

Often when a new account manager was assigned, the minimum deposit amount would be increased and the investor would be pushed into investing a new minimum regardless if the balance was well above the minimum (with profits).

Shift the blame to a non-contactable entity: welcome Walton Global

The final move was an email from MercerFX stating that accounts were moved to a new entity called Walton Global- with no further details, and at that point, clients would receive log in credentials to a new platform, which was branded Walton Global.

Clients then would call Mercer FX, which has now closed down, and had been provided no contact details for Walton Global apart from what can be found online including a cached version of their website.

There is no record of an electronic brokerage anywhere online in the name of Walton Global. Indeed the only name that comes up, is a real estate company in North America, which has received calls from clients, and has categorically stated that there is no involvement and that this particular company is nothing to do with electronic trading at all.

Mercer FX clients can login to Walton Global MetaTrader4 and can often see funds, and it shows that they have an active account but have no one to contact, no website and no way of making withdrawals.

FinanceFeeds believes this has been established as a ghost company that is most likely a white label of some other FX broker provided and setup to shift blame or attention from Mercer FX whom may now claim that the issues with withdrawals and profit, and inaccessibility of client funds lie with Walton Global.

UPDATE: we have managed to track down the entity to a UK company called Walton Global Ltd which we have reason to believe is the same entity. The Companies House in UK lists the entity with one director / shareholder which can be viewed here.

FinanceFeeds will continue to investigate further.

In essence, this is a classic example of a pump and dump scheme, however we firmly believe that former management of Mercer FX did not take the monies and run, instead they mismanaged funds, most likely spending it on keeping the company afloat breaking the number one rule – don’t touch client monies.

When they saw it was time to run (i.e. no more money) they most likely setup a ghost entity to shift clients onto thus in theory removing responsibility for their actions per se and leaving clients with a company that does not exist.

Speaking to Mr. Amar last month, he claims that he is no longer in the FX industry, and has started a call center in the insurance business.

New entity, IntegraFX. Same old MercerFX people, same tactics?

This does not tally with investigations made by FinanceFeeds which have led us to a new entity called IntegraFX which uses the website www.integrafx.com

FinanceFeeds conducted a detailed investigation within the industry and have found that Mr. Amar is indeed involved with integrafx.com alongside other executives from Mercer FX including Tzvi Aryeh (who goes by the alias Jason Raphael).

Interestingly, further investigations unveiled sources which understand that Mr. Amar is still involved with Mercer FX, and has simply started up a new website, and closed the previous one down.

A quick look at the website of integrafx.com shows that it is registered in the island of St Vincent, and the contact phone number is in Poland, however FinanceFeeds can confirm that the executive team are in fact based in Israel, and are common to the executive team of the formerly unregulated Mercer FX which has now vanished, giving very little recourse to clients and we have this in black and white.

 

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