On 18 August 2010, in the Weekly Observer Newspaper, Patience Akumu wrote, in an article titled "Online forex trade: a gamble or goldmine?" "Louis Majwala, who admits to leading a relatively comfortable life thanks to forex trade, is a good example of how you can turn your life around just by buying and selling forex."
Fast forward to 3 February 2011- the same paper carried a story titled "Ugandans lose Shs 11bn in forex scam" showing that over 300 Ugandans are trying to recover $4.5m from Mint Consult, which is owned by Louis Majwala's. The article states "A task force representing the interests of the duped clients has already attached assets belonging to Louis Majwala, the boss at Mint Consults Limited. However, the value of the attached assets – two car log books and a land title to roughly 20 acres of land outside Kampala – does not come close to what the clients are seeking."
The position of trader, created an implied trust between Louis and each client and imposed the following fiduciary duties on him
1. To act prudently/diligently and with reasonable care
2. To act impartially and avoid conflicts of interest
3. The duty to put the investors first and not to unfairly benefit from the trustee position
4. The duty to segregate his personal funds from the funds under management and provide accountability to the clients
5. The duty to provide information in a timely basis
6. The duty to preserve the confidence of beneficiaries
In the end, Louis breached each and every one of his fiduciary duties and it is said he created a ponzi scheme. I expect that he'll be bankrupt and probably in prison for fraud and obtaining money by false pretences soon (as a disclaimer-Louis is innocent unless/until proven guilty).
In an ironic twist, Louis says he can recover the money if investors give him $2m dollars more. I would be very surprised if the "duped clients" who were eager to give him their money last year give him one shilling.
This now begs the question, is forex a gold mine? Can someone really expect to make such huge profits(and losses but mainly profits if prudence is applied?) and also do you engage in FX trading?
ReplyDeleteThanks Saadiq. I have heard that because forex is very volatile (and therefore very risky) the possibility of making a killing is higher than most other options. However many traders don't tell you about the downside to trading and the possibility of losing money. Louis induced investors to give him their money by giving them guarantees of up to 25% per month-drawing their attention away from the risk. He then failed to come through and resorted to creating fictitious reports of returns. It was at this point that he either knowingly or accidentally started a ponzi scheme. I believe that you should engage in forex trading for yourself-or only rely on licenced traders who are both competent and fit an proper.
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ReplyDeletePeople are always talking about things they have never tried and base on heresay to make conclusions. Anyone who has ever traded before knows that the risk in forex can be controlled. You can trade a $10,000 account and risk just $1!! Forex trading has the potential of creating a lot of abundance for otherwise impoverished Ugandans. All it takes is to put in due dilligence. This is not a profession, whose perks you are likely to learn in a year! On the plus side, when you do learn how to generate money this way, you can not unlearn it. Can Louis recover? Ofcourse he can!! I am convinced he will. Donald Trump lost all his billions only become a billionaire yet again a couple of years later. I have traded forex for 3 years now and I honestly can not think of a better business in the world.
ReplyDeleteThank you John. I admire your passion for the business you are doing, but as you will no doubt apreciate, my article was not an indictment of the forex trading business. Instead, I examined the numerous wrongs and breaches of trust committed by Mr Majwala which you, as a trader, should avoid to prevent you violating your clients' trust (and probably ending up bankrupt & in jail).
DeleteI have had forex trading experience, and I have also worked in securities compliance for several years so I don't write from a point of ignorance. It is not in doubt that forex trading has "potential" but you can't deny the fact that it is a zero-sum game at best (before you deduct management fees) and it is a very risky business. It is unfortunate that most forex investors are only told what they stand to gain and they are not given adequate information on their actual risk exposure to enable them make informed invstment decisions.
Your ad-hominem argument conveniently ignores the fact that what Mint Consult did, was in fact a forex scam. You also ignore the need for compliance and risk mitigation, which every trader must have in his back office. Ignoring compliance and the obligations of a trader is an ostrich theory, which will backfire.
If you are trading for other people, I would advise that you take a good look at your operations and ascertain whether your investments are suitable, you have an investment and risk management policy, you have segregated accounts, and the promises you (impliedly) make to your clients are not misleading or maniulative and can actually be fulfilled. If you ignore compliance, you risk turning what you refer to as "the best business in the world into a forex scam like Robert Watson or Russel Cline's.
John Kironde I need to contact you. How can I access your contacts?
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