A few reminders of how the conflict of interest looks like – always good to keep in mind before entering into a business relationship with a trading/financial professional.
1. EuroScalperPro, a 100% automated Forex EA, is currently being heavily advertised on Facebook. It comes in a free version, if you sign up with one of the three supported brokers, or a paid one, at $197/month or $1,997/year. No matter which one you choose, there’s the same big conflict of interest: the guys behind EuroScalperPro (more on them in a second) make money – either through commissions on volumes traded or cash upfront – irrespective if the client makes profits or not. If this aspect was clearly understood, I believe only a few people would still want to do such a deal. Particularly that in this case you don’t actually know who you’re dealing with – the About page is hilarious:
Our ability to generate superior risk adjusted returns through widely ranging and evolving market conditions has captured the attention and respect from traders, fund managers, investment houses and private wealth managers worldwide. Our Commentary and Research have been quoted across the Internet and we are widely regarded as the authoritative source on quantitative Forex trading.
It takes some chutzpah to write something like this when no names, no faces and no supporting evidence are presented.
2. If someone got the impression from the example above that this happens only with anonymous companies, let me present Boris Schlossberg and his BK Asset Management.
2. What fees are associated with the Managed Accounts Program?
There is no management fee. BK Forex Advisors is compensated via rebate from broker.
Or, if you prefer to pay upfront, you can do that on the other website, for $145/month.
If you’ve been around Forex for some time, the chances are slim that you haven’t heard of Schlossberg or his business partner Kathy Lien. In their own words:
We are known in the forex community as Traders First Analysts Second because unlike market commentators who simply offer up their opinions, we risk our own capital in the market every single day.
But a word of warning: don’t make the mistake of asking them to substantiate the ‘Traders First’ part. You might get blocked (Boris) or ignored (Kathy).
The complaint alleges that Werner engaged in a deceptive and fraudulent scheme by churning the widow’s accounts over a three-year period to maximize his compensation by charging more than $243,000 in commissions, while causing the customer approximately $184,000 in net losses.
Beside highlighting again the danger that exists when the interests of both parties are not aligned, this case also shows that even in a heavily regulated arena, there are still some scumbags left.