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Many important changes happening in Club-FX Trader, as Peter updates after a weekend break.
Hi all,
As promised Mrs B and I took some time to see where we are at and where we are going. As you all know we have set targets for the year and we seem to be steaming ahead, one issue that I’ve been watching since we started is the rate of growth, too fast and we could have a problem, so in order to moderate the growth and keep it at sustainable levels we made a decision that once we reached cirtain targets then we would have to make a few changes to keep club-fxtrader realistic and make sure that we all have a future.
we’ve been set back a little by the hacker problems that we had, which had an impact on pretty much everything, including the trading. while we never experienced any trading losses we naver made as much as we could have, even to the point where we had to reduce the interst for a month.
Now looking ahead… We are comming to a point where the mentioned changes need to be implemented. So what we’ve decided is the following:-
1. From the 1st June interest will be reduced to 14%
2. Once a fund reaches a cirtain size we are required by law to register as a financial services provider, I can do this but it’s a process that requires that I stop trading with members funds while the registration is in the works, and it could take up to 6 months. So, to avoid any delays and keep on as we are we need to change the wording on the site. The solution is if we change the word “invest” and replace it with “loan”. There is no law that prevents me from borrowing money from anyone or prevents anyone from lending me money.
Our agreement is simple, you all know why i’m borrowing the money (to trade with) and I pay you interest for the “loan”. Each “investment” will be considered as a “loan”. The rules will still remain the same, i.e. if we suffer any losses, that you understand the risks and won’t come after me with a shotgun.
3. People with the maximum investment can (for the imediate future) continue to compound but not more than 75%. If your compounding is set to 100% please go and change it, the new selection will only come into efect at the end of your current 30 day period.
4. It is not yet time to stop new members from joining if they wish, the new member issue will be looked at again in a few months.
So as things are right now, there are no changes that will have a negative impact on any one accept that from 1st June the interest rate will be changed. I had a look at the thread over at GT and the speculation is all pretty accurate. The limited lot sizes and the need for me to be able to trade without the pressure of having too much money in trade. I understand that to a lot of you “having too much money” sounds crazy, but it is true and any negative pressure can be disasterous when it comes to making decisions (especially with other peoples money)
Because of the 4 month setback with the hacker, I have not been able to start a reserve fund yet, it is still very much in the plan and I will work toward starting it hopefully in the next few months.
I’ll make the changes to the wording on the site and the rules etc in the next few days, If any members don’t want to stay and prefer to withdraw their “investment/loan” they are free to do so.
If you have any questions please feel free to send me an e-mail and I’ll do my best to answer you.
Regards
PeterB
Popularity: 1% [?]
Hmm Peter,
How come I have not received this update? Can I assume that the website is back in order? If so, must we re-register? Because I have not re-register and am now unsure of the status of my account?
Hope to get an answer….
many thanks
Sing
Changing the wording from investment to loan does not change the rules. Instead of investing, it will be offering secured interest loans, which means it is still a financial service and still needs to be registered as such. Since it is inter-state and selling securities, it falls within the SEC jurisdication.
A duck is still a duck.
JMO - Sharon
Yeah, looks like another Legisi to me.
Sharon - Please clarify “secured interest loan”. Seems to me there is nothing “secured” about any of it. To me it seems it is nothing more than an unsecured loan - I provide money and terms are outlined which will be followed to repay that loan - no collateral, no guarantees, etc. What is done with the money I loan is not of any direct consequence to me - other than obviously I hope whatever is done with it allows for full repayment of the load according to the terms as outlined. You mention “it is interstate and selling securities….”. Who’s selling securities? What if real estate transactions were used? What if sales of pencils were used? I once loaned money to a friend with which he purchased a motorcycle. He repaid the full amount with interest. Where did this fall as far as jurisdiction? By the way, I’ll deny it ever happened if some agency comes knocking on my door…. :o) Thanks in advance.
Hi Scott,
As I understand it a secured interest loan is one where you loan money to a company, who secures the interest with inventory, a physical thing (like real estate), or an investment intrument. In this case, loaning money to Club FX for them to invest it in Forex fits the definition. You are loaning to a company. The company is securing it with the intvestment vehicle Forex. Also, they are offering the security across state lines.
If you did not have knowledge of what they were doing with the funds, then they are not securing the loan.
In your example of loaning a friend money for a motorcycle, that does not fit the definition. First, you were loaning to a person, not a company. Second, that friend probably lives in the same state as you. Third, your friend wasn’t directly using the motorcycle to generate returns for the interest that they paid you. You didn’t say if they used the motorcycle as collateral, but it really doesn’t matter in your example.
So, yes, Club FX, Legisi, and Global Online Depository are all selling securities and/or a secured interest loan across state lines.
From http://www.sec.gov/about/whatwedo.shtml
“Not all offerings of securities must be registered with the Commission. Some exemptions from the registration requirement include:
* private offerings to a limited number of persons or institutions;
* offerings of limited size;
* intrastate offerings; and
* securities of municipal, state, and federal governments. ”
What I don’t know is what “limited size” means. Just try reading http://www.sec.gov/about/laws/sea34.pdf to see if you can get a clear idea of “limited size.” I even tried to find “limit” in the document and there are 268 instances of the word. I got lost trying to read through it all.
Does anyone else know what the criteria is for the SEC in a nutshell?
JMO,
Sharon
PS A related article is “Is It a Duck?“
This is interesting information that I came across on the Legisi thread at scam.com. It’s from the Treasury Department…
“In the leading opinion, the Supreme Court of the United States, held that the definition of a security includes an investment contract, which is “a contract, transaction, or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or third party…” Designating such instruments as “loans” does not alter their legal status as securities. SEC v. W.J. Howey Co., et. al, 328 U.S. 293, 66 S. Ct.1100, 90 L.Ed. 1244 (1946).”
- Sharon
So, may I understand that not accepting funds from USA people avoid SEC rules?,
Could it be the cause why e-gold placed that new feature in its control panel to choose refusing money from USA accounts?
Thanks for the info Sharon. The Treasury quote is an interesting/concerning one. Also, you indicated “If you did not have knowledge of what they were doing with the funds, then they are not securing the loan….”. This may be why Greg at Legisi is not particularly forthcoming with what is done with the funds…. Thanks again.
Somewhere on the SEC site is a document which states, that a club of 100 people or $100,000 would be ok and be seen as a private offer.
Sure, if you have a company and don’t accept US citizens, SEC has nothing to do with your business. Then you are in the jurisdiction of other FSA’s (Financial Security Agencies).