CWM FX – Where There is Smoke, There May Be a Forex Fraud Fire Brewing

Drama continues to encircle CWM FX, the high-flying forex broker that burst onto the London forex scene in 2014. First, in early March its London high-rise offices at Heron Tower were raided and thirteen arrests made, ostensibly to do with alleged fraud and anti-money laundering activities, which the firm has subsequently denied. And then most recently, Leverate, the company’s trading platform provider in Cyprus, withdrew its support, forcing the broker to shut down its website. Clients had been forewarned, but all that exists today is a curt apology for the inconvenience at the site’s web address with no further explanation given or hints at when the current delays might end.

The tale of CWM FX mimics a Greek tragedy of mythological proportions, the one of Icarus flying too close to the Sun with his waxen wings, only to fall precipitously to his death as the was melted. A simple Google search also does not reveal the details that you would normally expect. In other words, CWM FX seems to be shrouded in mystery, except for numerous high profile sports promotions. From the London Boat Show to racecars to rugby teams, the press releases have flowed as if the champagne corks would never stop popping. And then the firm inked a deal with Chelsea FC, the current leader of the Barclays Premier Football League. Surely these fellows must be on the up and up if so famous an organization would align with them.

As best as we can tell at this stage, CWM FX is one of a dozen companies formed in the last two years by an Anthony Gregory Constantinou. Per his “Linked-In” profile, Mr. Constantinou is 33 and an accomplished marketing entrepreneur in the IT space, having formed, grown, and then sold his last company venture after seven years in order to pursue his passion, the financial services market. CW World was formed in 2012, and then a host of financial service entities followed, including CWM FX. The CWM World Group, per its website, “boasts 30 brands, of which nine are defined as “financial brands” stretching from FX trading to funds, securities and life insurance.”

What do we know about CWM FX?

There are no reviews of the firm by reputable review sites, so very little has been written about them, if anything. They did make quite a splash when they appeared on the scene in 2014, touting a multitude of glamorous sports franchise sponsorships to beat the band. One could only assume that these very public entities performed their own due diligence before signing any contracts with CWM, but, perhaps, a few financial incentives caused them to look the other way.

Although their website is in idle mode, their “Facebook” page remains very active with over 12,000 likes and streaming commentary related to the foreign exchange market. Similar data feeds may be found on “YouTube” and “Twitter.” The only description given for the firm on Facebook is that “CWM FX is a complete FOREX trading platform allowing real time trading and statistics.”

A group of stars on the Chelsea Football Club is prominently displayed with the caption “Official Club Sponsor of Chelsea Football Club”. That statement in itself is a bit of an exaggeration. CWM is one of many sponsors, but their contractual relationship was stated as Chelsea’s “new online forex trading partner.” The press release quotes are more revealing:

• Adrian New, Chelsea FC Managing Director of Asia Pacific, said: “We are delighted to welcome CWM FX on board with us. Our goal is to partner companies which share our philosophy of innovation while consistently competing at the highest level and we look forward to a fruitful relationship.”
• Anthony Constantinou, CEO of CWM FX added: “CWM FX and Chelsea FC are both leaders in their respective fields.  Our partnership emphasises the synergies between football and trading where preparation and execution are keys to success. We are very proud to be partnering Chelsea and look forward to the coming years.”

The deal was to run until 2018, and, during that period, CWM FX was planning to develop “its presence across Chelsea’s digital media channels with a series of cross-promotional and marketing activities, using the club’s worldwide appeal to offer its customers exciting trading incentives.” No details were forthcoming on the amount of cash that was necessary to allow this new forex firm to so brazenly use the enormous brand image of Chelsea to further its own aims, but we can only guess that it was substantial. As noted in the release, Chelsea FC “is seen as wealthy, ambitious, fashionable and with immense drawing power, a good image projection for any brokerage firm.”

CWM executives have been living the highlife of late

Rarely has any corporate entity made such a brash entrance on the social scene as has CWM executives. As one tabloid reported, “The men at the top of CWM FX have been living it up this year – meeting Royalty, mingling with world champion boxers, and enjoying top-of-the-table Premier League clashes from the comfort of an executive box at Stamford Bridge, home of Chelsea FC.” Marketing types revel in dreams of such glitzy events and exposure, but regulators are not so keen on such hype. This type of behavior smacks of a Ponzi scheme in motion with investor monies funding lavish lifestyles.

CWM, however, is not the first forex company to market through a relationship with a prominent football club. Manchester City, Liverpool, and Manchester United have put forex logos on their game jerseys, as well. The marketing rub off of exposure to rabid sports fans must garner more than the average response to currency trading. The gambling nature of sports enthusiasts may be the motivating factor, but, for forex brokers, the search for new customers is a never-ending task. Casualty rates tend to be high, nearly 70% by some accounts, forcing brokers to get aggressive in their various marketing campaigns and promotions. Sports sponsorships must be working.

What triggered the police raid and what exactly happened?

The Heron Tower at 110 Bishopsgate, also known as Salesforce Tower, is one of the newest, tallest, and most prestigious high rises to grace the London skyline in quite some time. When a police raid occurred on March 5^thand 13 people were led off in handcuffs, it caused quite a stir in the financial district. Law enforcement officials divulged very little information, but it was disclosed that the Financial Conduct Authority (FCA), the official regulator of forex activities in the UK, had supported the undertaking.

According to the London police fraud squad, the raid resulted in the arrest of 13 employees – 10 men and three women. The arrests were related to alleged “suspicion of money laundering, as well as fraud by false representation and conspiracy to defraud.” The name of the firm was not given, but immediate speculation was that it was CWM FX. The firm quickly tweeted that this was not the case, but that message was soon deleted. The broker has now hired a high profile lawyer to defend its reputation. The latest missive is that no raid ever took place and that business as usual is continuing.

The story could end there, but it did not. CWM FX claims that “it is operated by Leverate Financial Services Limited – a Cyprus Investment Firm (CIF)”, but attempts to verify an ownership link between Leverate, a forex trading platform provider, and CWM have proved futile. We can only surmise that the bad press garnered by CWM caused Leverate to protect its reputation by suddenly retracting the use of its trading platform. Per FCA regulations, the website had to be shut down, but, if this were known ahead of time, why have CWM executives failed to have a back up platform at the ready?

Concluding Remarks

Where there is this much smoke, there surely must be a fire brewing somewhere. CWM could also be quite legitimate, a victim of hearsay and a rush to judgment. During our investigation, we did turn up a mysterious posting from a blogger that claimed to be a former employee of CWM. He had warned a few weeks before the police raid that the CWM FX was:

“a boiler room and outlined all of the unethical practices there. I worked there as an employee literally for a couple of days and resigned in disgust after I witnessed the misrepresentation, misleading statements, lack of risk warnings and high pressure sales tactics. An additional poster on the thread I started mentioned how CWM FX was soliciting for asset management business (outside of their licensing) with a ‘guaranteed’ investment offering guaranteed monthly returns ‘off the record’ and suggested that it was a ponzi scheme.”

CWM threatened the blog site with litigation, and the comment was subsequently withdrawn, but the blogger returned with an “I told you so” comment after the arrests came to light in local newspapers. Was the blogger on the level or just another disgruntled employee bent on revenge? We may never know, but something tipped off the FCA to conduct an inquiry. Regulators do not take complaints lightly, especially ones that involve very high profile public extravagances.

The lesson here is that high exposure marketing sponsorships can be a double-edged sword, netting an avalanche of new customers, but also attracting a higher level of scrutiny than was ever anticipated. The advice at this point is to withdraw until the dust settles. This particular story is not over. More details will be forthcoming, and, until then, our recommendation would be to wait for a few verdicts to hit the floor before venturing again into these smoking embers. Caution is better than rash courage.

Chris Lee

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