Key Questions To Ask Before Investing

What is the liquidity of the investment? Most investment funds are long term investments and have various restrictions on withdrawals so an investor cannot withdraw at any given time. Sometimes an investment fund sets up yearly or quarterly windows for withdrawals with certain requirements. investors should be disclosed the withdrawal information in a disclosure document and should review the terms before investing. What is the size of the investment fund? How many other investors does the fund manager or forex trader have? How much money has been collected from those other investors? Investors should understand how large the fund is to determine the portion of the fund consists of their investment. Investors should also inquire where the money is held and ask for independent confirmation that the funds actually exist. What is the track record of paying investors their interest and principal payments? Promises and expectations may not always materialize. Investors should verify that the forex investment fund or manager has met their obligations to other investors before investing. Is the forex trader or forex manager licensed with the NFA, SEC or the Utah Division of Securities? Is the forex investment fund registered with the SEC or Utah Division of Securities? Ivestors should be extremely wary of any trader, manager, or investment fund that seeks to avoid proper licensing or securities registration. Such traders, managers, and investment funds do so either because they are unaware of the laws, rules, and regulations of the industry or they are looking to avoid regulation. In either case, this raises serious concerns about such individuals or companies. How will the forex trader or forex fund manager use the investment funds? Investors should fully understand how the forex trader or forex fund manager will use their money, the types of investments they will make with that money, and the risks associated with such strategies. Has the forex fund manager or forex trader been involved in any legal proceedings, including civil lawsuits, bankruptcies, or criminal actions? Clearly, investors should be concerned if the individual or company has a history of regulatory actions, civil lawsuits, bankruptcies, or criminal actions. Will the account be set up in the investor’s name, the forex investment fund’s name, or some other individual or company name? For forex traders that do no pool investor funds, investors open a forex account with a forex dealer in their own name. Investors then deposit money in their own name. These companies should be registered with the NFA and regulated by the CFTC, but they may also be broker-dealer firms registered with the SEC.

If the forex trader seeks to have investors deposit funds in the trader’s name or in some other company’s name, they are likely pooling investor monies into an investment fund that must be properly registered.

For forex fund managers that pool investor monies, investors will send their money to the company that is named in the subscription agreement and the disclosure documents. The company named in the subscription agreement and disclosure documents is the company with which investors have a contractual relationship; so investors should not send their money to the individual manager, the management company, or any other third party.

When investment funds have money wired or checks written to individual traders, managers, or third parties, it is a red flag that investment funds may be commingled with personal funds or that the investors money will be used in some way not disclosed to the investor. For forex investment funds, will the forex fund provide independently-audited financials of the company? Will the forex fund provide their accountant’s contact information? Investors should review the financials of the company in which they may invest. Investors may also want to discuss with the accountant the cash flows, investment returns, and expenses of the investment fund before investing.