Royston Vasey in Central London. Come on FCA, why is this allowed? – Op Ed

“For those of you not in the know, The Big Issue is a magazine. It’s a bit like Bunty, but written by tramps” – Steve Pemberton, League of Gentlemen

Quite.

This type of voyeuristic candor may well have made a cross section of British society either squirm or smile depending on one’s acceptance of vulgarity as a subject of amusement, however the fictional Northern town of Royston Vasey and its bizarre inhabitants resembles absolutely no part of plate glass, sophisticated, school-tie-and-Queen’s-English central London.

Or does it?

Indeed, many of those with good opportunities and an urbane and sophisticated international life in London, who during the latter part of the 1990s sought self-satisfaction in thanking the powers that be that they do not either live in, or resemble the inhabitants of Royston Vasey following a thirty minute weekly fix of televised peculiarity can perhaps reconsider that for the past 15 years there have been a handful of similar characters nestling within London’s islands of tranquility, lurking in the shadows of the financial center’s glass towers in Docklands and the City.

None are Londoners, nor do they have bona fide business in London, and yet the litany of absolute horror stories that adorn the retail FX consumer forums and websites raining contempt on these individuals and their completely unaffiliated and unregulated schemes are easily available to the Financial Conduct Authority (FCA) and the ombudsman, yet London’s own League of Gentlemen are out and proud, waging their aggressive sales campaigns in full view of every high-end financial institution whose senior management right down to back office staff are a bastion of professional conduct, each one contributing to London’s status as a global financial services industry superpower.

From Tier 1 banks to back office desks in retail FX brokerages, London’s professionals are highly educated, sophisticated and demonstrate a world-class level of detailed electronic trading industry knowledge that ranges from infrastructural topography to prime brokerage trade processing, and take a pride in their careers, whilst the authorities which demand millimetric precision in trade reporting and execution practice, top of the line customer service and full transparency look on from Strasbourg and Brussels, to the offices of the FCA itself, which lies in the same neighborhood as every firm from Barclays, Citigroup, Thomson Reuters and Currenex to IG Group, Saxo Bank and CMC Markets.

Public listings, 40-storey towers and dedicated connectivity that has allowed London to shrink the world is what the Queen’s capital is known for.

So, if this is the standard, and an extremely good one it is at that, why are unkempt chancers allowed to operate their odious schemes unabated, right in front of the nose of the FCA and all of the institutions that uphold such a good standard?

Some twelve years ago, an unusual looking river cruiser appeared on a permanent mooring just off Marsh Wall in London’s Millwall Inner Dock, which is a floating harbor on the Isle of Dogs next to Canary Wharf’s giant financial institutions.

The river cruiser was designed by Lymington-based Simon Rogers in 2000, one of just two ever built, and has the insginia “Kairos” emblazoned on its fiber glass construction.

Rogers Yacht Design had built it to order, and just a few years later, it was sold to its second owner and arrived in an extremely prominent position in Millwall Dock, can be seen by every passer by and can be clearly located on Google Maps (As per our featured image).

From the day it arrived until very recently, the yacht has been used as a dubious FX training room, guided by Andy Shearman, who claims to have been a head dealer on specific spot FX desks at firms ranging from SG Warburg to Citigroup throughout the 1980s, and who now seeks to impart his market knowledge to novice traders via lessons which are chargeable to those who take the ‘course’, with a requirement also being to purchase the software which effectively does very little.

His course is intended to be two days, however it is often just two hours in the morning, two hours in the afternoon, with a demo account being traded by the trainer, the business model being to sell a system which is sold under the pretense that it will generate massive returns for novices, and the course being the basis for it.

This can cost anything up to $6000 ($3000 for the software  and $3000 for the course), and then the trainer signs the delegates up to accounts with unregulated brokerages, then splits the losses, demonstrating an absolute conflict of interest.

The reality is dejection and a shadow cast in the minds of the novices never to trade FX again. The regulatory authorities are also not able to intervene. FinanceFeeds has contacted the Financial Conduct Authority (FCA) about this matter, the answer having been that ‘educational’ entities are outside the remit of regulators.

FinanceFeeds does not agree with this ruling, on the basis that these are not providing educational resources, but are actually giving financial advice without the accreditation to do so, and encouraging people without the necessary skills to engage in very high risk positions. This is something that does fall under the FCA’s remit, but because the entity is classified as a provider of training seminars, there is no investigative jurisdiction.

As long as six years ago, the Guardian newspaper ran an insight into Greg Secker’s Knowledge to Action scheme.

They reported the sort of brass-balls bravado that is being used by such characters to pump people up. “I promise you, guys: as long as you follow what I do, you’re going to make money. It’s very difficult not to make money,” said the presenter, Gurdas Singh, of a coaching firm called Knowledge to Action. “Trust me: when you start trading, your family members will be giving you money to start trading for them. At the end of the day, banks are giving you nothing. Don’t put anything into an Isa – it’s a waste of time.”

One can almost envisage him bouncing on his feet and rhythmically clapping whilst delivering such a ruse.

The Guardian probed Mr Secker’s career history, and after repeated unanswered questions asking who Secker had traded for, Knowledge to Action issued a statement. It said: “Mr Secker’s background is set out clearly on Knowledge to Action’s website. There is no assertion that Mr Secker was a trader at BNY Mellon and Mr Secker makes no such claim.”

The same applies in Canada, where a large firm there conducts similar seminars and offers similar software, as well as has a conflict of interest with its clients via IB relationships with unregulated, high leverage b-book brokers in order to split the losses, yet the provincial regulators consider this to be education, hence it is outside of their remit.

In London, aside from the aforementioned, there is one particular firm that has managed to finally attract the attention of the authorities.

Where the FCA has been flaccid, the Advertising Standards Authority (ASA) has upheld a complaint against Learn To Trade’s overtly implausible advertisements.

Learn To Trade follows the same path as the examples that FinanceFeeds has seen of this type of entity. Its owner drives a Lamborghini, and often makes a point of stating that he trades from his helicopter, and that his delegates could do so also.

What is surprising is that relatively educated, sensible people actually believe that it is possible to trade from a helicopter and live a life of champagne and yachts whilst popping the odd trade in here and there.

Even for those who did not spend the formative years of their career in an internship or apprentice program which involved constructing and maintaining Tier 1 bank electronic trading connectivity and infrastructure whilst having to complete Cisco and Microsoft enterprise qualifications in financial infrastructure would be able to look up very readily how markets connect to venues, and see that it is really not possible to trade from a helicopter to any sort of advantage at all.

Imagery of comfortable retirement (many of these entities prey on senior citizens or those approaching retirement age) pepper the company’s website, and marketing and advertising are very high profile.

Last year, FinanceFeeds reported that the ASA’s reasons for rebuking the firm’s marketing material was to do with claims in one of its ads for a Forex seminar were misleading, unsubstantiated and exaggerated.

The ad in question represents a Facebook post for Learn to Trade Ltd, seen on November 22, 2016. The ad stated “Discover how to get your share of the largest and most liquid market in the World. Join us for an educational FREE Forex Seminar Limited seats- Book Now! Learn the Secrets of Successful Professional Trading. Learn the power of compounding or how to make £3.5 million over the next 15 years…”.

The complainant questioned the claim “learn how to make £3.5 million over the next 15 years”.

Learn to Trade Ltd responded that 25% of their clients had a starting balance of at least £20,000 in their trading account and they taught their clients to risk only 2% of their account size on any single trade. The company explained that when starting with a £20,000 trading account, they assumed a 3% growth per month and that this would end the 15 years on £4,090,067. Learn to Trade Ltd added that they only advertised £3.5 million on the basis that not all trades were taken and to allow for a 15% margin of error.

This is absolutely in keeping with FinanceFeeds findings, online and offline. Attendees to these types of courses and purchasers of ‘cure all’ systems are often subjected to outlandish claims of vast returns with no performance data to back it up.

If there is a regulator that really should understand the electronic trading business well, it is the FCA. The regulator is over three decades old and many of its senior figures are in regular contact with the institutional and retail giants of London. The issue is that they simply do not cover these entities.

For those who are brokerages and are tempted to use such flamboyant characters as a means of onboarding clients en masse, think again. A ruse often used by such people (most of whom are one-man bands) is to ask for up front sponsorship from the brokerage and then simply not refer any clients, knowing that the broker will never raise this as an issue because it smacks of conflict of interest.

From what we have seen of these characters, most of them display a very aggressive methodology, often belittling their delegates to use a sort of passive aggression in order to place the control into the hands of the ‘trainer’ and make the delegate feel disempowered and inexperienced to the point where they will do whatever the ‘trainer’ tells them to do, including hand over money and then be told that they are ‘stupid’ for not doing trades correctly (even though the trainer is using a demo account from an unregulated broker and is not actually trading at all).

Most of such trainers have no capital base and are living from hand to mouth on broker commissions, shattering any idea that they are stable, independent and successful. This even applies to traders who actually do have some kind of background, but reliance on their methods is equally questionable. As of early 2018, Nick Leeson, the infamous trader who caused the collapse of Barings in 1995 and spent time in jail for it, is Lead Educator at Bizintra trading academy. Porridge, restitution orders and a bucket for a lavatory are hardly the stuff dreams are made of.

When looking at the yacht in Millwall Dock, which today languishes, green algae accumulating on its hull, the FX Money Map entity that used it as a training room for so long (which has a litany of horror stories across retail orientated FX forums) has been the subject of several name changes, TraderHouse being one of them, AceTrader being another, as well as several YouTube videos showing clips of the facilities in various places and lots of bravado and banter but no trades being made.

A search on this particular firm in Companies House and with some directorship due diligence data providers shows that there is no registered company for either FX Money Map, AceTrader or TradeHouse, and some dissolved entities relating to them some years ago, all of which are registered to a private residential address in Croydon, South London, which was sold in 2015.

Caveat Emptor: If you are a broker and you wish to encourage traders via webinars and charting systems that help them trade better, stick to those which actually integrate into trading platforms and do not operate as entities which take IB commissions or split client losses, or sell their ‘software’ directly to end users with no means of integration.

Effectively, you can trust Autochartist, Trading Central, and ChartIQ, because these are actual industry standard charting and market analysis companies that integrate to trading platforms via API connection and do not engage in the practice of attempting to promise traders high returns for the purchase of software or an IB deal between brokers where P&L is brought in.

These are genuine, licensed software products that brokers pay license fees for, and are integrated, hence they are a valuable tool for actionable content, charting and market sentiment analysis.

Avoid the yachts, over-the-top bravado, helicopters and Lamborghinis, because quite simply, that is a load of old flannel.

Come on regulators, protect those who are being duped. It is easy. Simply open the internet and type in the names. Or walk along the Thames.