Many times we see different articles and allegation against brokers but we rarely see as much details and as much investigation by a journalist or a TV channel, which not just opened the case but made the company go and do comments about the case and encourage an ex employee ( as he describes himself to be) to go and talk about how did the company start and what are the practices followed to bring in new clients , new funds and how employees and clients are treated.
To brief you about this issue the article is published by Forex Magnate (IronFX Grilled on Chinese TV by Affiliates, Criminal Fraud Investigation Filed on Air – Updated | Forex Magnates)
and is about a series of TV shows in where a Chinese journalist is trying to investigate serious allegation against IronFX specifically from IB’s or as they are described Affiliates. Allegation was related to the following Points:
1- IronFX’s MT4 trading platform had suddenly stopped working, causing major losses for investors.
2- Not paying Commissions to Affiliates as agreed due to policy change “In the first two months, IronFX paid the promised amount of commission to the affiliate. But starting from the third month, IronFX claimed that the commission policy had changed and according to the new policy, they were not qualified for commissions.
3- Clients deposit hitting clients accounts while actual fund cannot be traced to be leaving China.(what happens to the money??)
4- Having operations in china without obtaining a license while having some representatives of the company claiming to have reserved foreign currency with the Foreign Currency Regulation Bureau which it was confirmed that did not happen.
The company under pressure answered to the Forex Magnates with an announcement from the IronFX General Manager and Chief Compliance Officer about these allegation and accusations, remarking 3 main points:
1- “We do have legal opinions that our operations in China are legal and legitimate”. Does this allow you to have offices and employees in china?
2- With regard to the funding IronFX does not do anything different from what the whole industry does. ….If you do what others do does this make it right? And what do others do? Is it all others or some of the others? It is really a choking statement from a GM & Chief Compliance Officer in my own opinion!!!!!!!!!
3- They are very surprised by the false allegations and our lawyers are taking the necessary steps against the TV station. … Which part of allegations is false, all of it? Part of it? – The statement regarding funding is a kind of confirmation to what came in the investigation so is this the only thing that is correct? Or some other allegations are also correct?
Last please note an interesting comment mention from an ex employee(as he calls himself) who wanted to share whatever he/she knows around this company, Basically let me share with you some of the main points he mentions;
1- The company is run by one person who is the CEO who has assistance from his brother.
2- The company started with stolen client database of clients and IB’s and technology information from another FX broker who the brother used to work for before Iron, the brother that is now a share holder.
3- The current china CEO is also an ex employee of the mentioned FXbroker.
4- The company started in china by bribing the local police to close the offices of the ex FXbroker we talked about and started by taking their place by copying every aspect of what they were doing even the image of the company.
5- The company continued to head hunt employees who have access to large clients date bases.
6- The sales process is the most aggressive process that it can happen with high targets for sales people and very long working hours, he describes the office like a military camp run by the CEO with commissions on deposit and deductions in case of withdrawals. Some of the sales tektites used are described by this example include:
a. The power hour (People are forced to work standing and are not allowed to close the phone for 1 hour
b. The Wednesday pizza marathon were everybody works until midnight to eat free pizza.
c. The Monday morning email from the head of sales which is got letters with font size 25 telling sales people that if they don’t meet their targets he going to make sure to send them back to China on the next flight.
d. The shame list which is in public view inside the office which lists employees which are underperforming according to Ironfx Concentration camp rules.
7- Once marketing expanse went very high , new deposits could not cover so they had to go to cost cuts which included:
a. Open offices in Latin America with very cheap labor.
b. Reduce client acquisition cost, so no more commotions on volume and move to one off payment (CPA or cost per accusation) a model used by another big broker so copy this.
c. Do not pay for BI’s the CPA if clients are making money and this is what made the big story on china TV.