I just came across this FPA post today. Apparently the managed accounts provider LegendTrader.com was and probably still is doing something fishy.
Btw, you can discuss this issue on my forum in this thread. Or on the FPA forum over here.
The Forex Peace Army investigators investigated their foul doings and reported as follows:
We the members of the Scam Investigations Committee of the Forex Peace Army have deliberated on all the evidence available to us and have reached a conclusion. It is our opinion that…
The forex managed accounts company known as LegendTrader.com, run by a man know as Khalid Alam Chowdhury, charged FPA members Bogdan and $3500 up front for a number of types of insurance as part of an agreement to manage forex accounts.
There were 2 parts to this insurance. The first was allegedly to protect LegendTrader from clients running off without paying the percentage of profits that would be considered account management fees. We find this to be very questionable, since it would be foolish for any client to fail to pay fees to a profitable account manager. Another part of the insurance was an “Exotic Options Contract” that would somehow miraculously protect the account holder’s opening balance against any losses. We have done some research, and there are such things as Exotic Options Contracts, but we can find no information on the web about these being used by any other managed account company as a form of insurance against losses in a managed account.
Further, Bogdan was told by Khalid that only 5% of the account will be used in the beginning as margin till the account balance increased in value by 5%. After this Legend Trader will use only the profit to cover the margin and not touch the initial investment.
Bodgan tells us that account balance of $10,000 initially went up about 40%, then lost about $7000 in less than one week. Since the initial balance was not supposed to be touched once he was 5% in profit, we find that this violated the terms of his agreement with Legend Trader. After several other unprofitable trades did even more damage to the account. Bogdan complained. At that point, Legend Trader made him their Sales Rep for Europe and promised him commissions from any new traders he brought in to compensate him while they tried to make up for the losses. We find offering someone commissions to bring new business to a company that has just proven itself to not follow basic rules to risk management to be highly suspicious. Bogdan repeatedly asked Khalid Alam Chowdhury to use the insurance policy to recover his losses. Khalid’s last offer before breaking off communications was that the insurance could recover about one-half of the losses and would take some time to exercise.
Soulfriend tells a very similar story. He paid the same $3500 up front, and then LegendTrader went against all normal rules of account management, lost about $7000 in one day. Then there were suddenly excuses, delays, and failure to reply about using the insurance to recover his initial investment.
Our investigator, Lt. Gerard emailed Legend Trader and asked it anything could be done to recover Bogdan’s money. LegendTrader suddenly had a lawyer (allegedly with a Bachelor’s degree in law). In the first email, the lawyer questioned if the FPA had any authority to investigate. Our investigator explained that since we act as an advocacy group trying to help mediate and resolve disputes between traders and companies, and thus have no need of the numerous different authorizations he wrote about. We find it strange that a lawyer claiming to know about international law would not realize this. The lawyer then threaten to use “U.S based multinational entities” that LegendTrader is affiliated with to “to go against you if you really want to put yourselves into jeopardy.” Our investigator wrote back and suggested that if Legendtrader is really so well connected, perhaps the company should put more effort into resolving customer issues instead of wasting time on threats. Since then, neither Khalid, the alleged lawyer, nor anyone else at LegendTrader has responded to any of a number of emails sent by our investigator or by the two traders who have lost so much.
We find it very questionable that such an allegedly well-connected company cannot seem to reply to their own customers. We also find it questionable that the email addresses for LegendTrader are all at a web-based email service called runbox, and their alleged lawyer’s email address is at another web-based email service called inbox.
Finally, our member soulfriend tells us that he finally managed to call Khalid and that Khalid hung up on him when he tried to ask about his account.
From all appearances, we believe, but cannot prove, that the $3500 in up front fees has nothing to do with any sort of insurance and is just extra money collected for Khalid Alam Chowdhury and LegendTrader. This alone would be sufficient grounds for us to warn our members to stay away from this company.
The Forex Peace Army’s second definition of scam is “Any other forex-related company refusing to return money that legitimately belongs to a trader,” We conclude that LegendTrader has failed to follow its own contracts and return money due to two of our members. The Forex Peace Army’s fifth definition of scam is “Other behavior that would be considered to be highly unethical by a reasonable individual.” We conclude that any account manager who could inflict so much damage on accounts in such a short time and then would cut off contacts with clients and threaten those who attempt to help clients would be considered unethical by a reasonable individual.
We officially find LegendTrader to be a scam. We offer LegendTrader and Khalid Alam Chowdhury the chance to resolve this issue by returning funds legitimately due to Bogdan and soulfriend.
We extend our deepest sympathies to our members as well as other traders who have lost money under the management of Khalid Alam Chowdhury and LegendTrader. We commend Lt. Gerard on his efforts in this case.
LegendTrader is hereby blacklisted by the Forex Peace Army.
We strongly discourage everyone to not to business with this company. We encourage any and all persons who have lost money to this company to work together to take any and all proper legal action against them.
The original complaint and statements by our members can be found here
Legend Trader Managed Account