Skip to main content

An Intellectual Casino
Published Postimees 15 October 2012

Imagine an animal. It is grey, has eight arms, a primitive brain, and suckers, lives in the sea. It looks like an octopus, it's mother and father are octopuses, its children are octopuses. But it is not an octopus. Let's call it a non-octopus.

Now imagine an investment firm. It has grown at a phenomenon rate over 10 years. Its sleekly dressed, oily, smooth talking, Russian-speaking owners make huge amounts of money. Most of its customers lose money and they lose ALL their money. But lets not call it a scam, let's call in a respectable brokerage company working hard to make money for it clients. It is not in any case an octopus.

Tallinn is the global headquarters for a venerable institution, which for legal purposes we will call Non-octopus Forex company. It is all part of the retail forex market which in Estonia is controlled by Russian-speaking Estonian who started out in the 90s. They allied with Russian from the mother land in the early 2000s and set up shop here in Tallinn. non-octopus Forex has plush offices down town. It billboards can be seen in advertising hoarding in the city centre. With offices in over 27 country and growing, its emm..... tentacles are spreading out across the world.

Non-octopus remains an excellent way for suckers to lose all their money. Don't take my word for it.

"Ninety five percent of our retail customers lose their money. It's an intellectual casino," Juri K one of the companies top managers told me. He went on to say that the education and training programs are a waste of time.

Juri seems typical of non-octopus's senior managers, speaking perfect English, he is impeccably dressed, he can operate in any international setting. Ironically he doesn't operate so well in Estonia, his intellect and interests are elsewhere. In my interview with him he betrayed a lack of knowledge about what is going on here.

Forex short for foreign exchange is investing in the price of national currencies. Just as an investor might trade shares, an investor can try to make money guessing about the price fluctuation of foreign currencies.

Everybody is in agreement that forex is high risk because it operates on something called gearing.

Think about buying a house. You put down €10,000 to buy a €100,000 house and borrow the rest from the bank. In effect you control an assets worth €100,000. If the price of the house goes up to €160,000 as happened a few years ago, you have made €50,000 profit, assuming you sell. But if the price goes down you could be in deep trouble.

That's how forex works, but the margins so much are bigger the potential for loss is enormous. €10,000 can get you control of €5000,000 at the outrageous 500:1 margins that Non-octopus Forex company can and does operate.

Forex is supposed to be for the big fish. Countries and huge international financial institutions make up the bulk of the market.

In recent years the recession has created a lot of desperate people all over the world. Company's like Non-octopus Forex company have preyed on them.

American, Chris Brown, 32, worked for the company for nine months developing new markets. He is one of a number of foreigners the company recruited to pull in foreign clients. He said Non-octopus is a gambler's racket that attracts people who are too poor to be investing in anything, how much more Forex.

"The whole industry is centred around cultivating the idea of a casino. If you look at the style of art work on their websites."

Brown describes a world where poor people in countries like the Philippines are getting ripped off by
"shady suits in Tallinn."

"Set aside the moral elements it is bad business anyway. But that's what we were doing because it was the quickest easiest money," Brown said.

"We send advertising to people who don't have the wherewithal to understand the awful nature of trading."

The final straw for Chris was a marketing campaign which offered €50 for trading a certain amount with a demo account in the Middle East and other parts of Asia, places where €50 is a couple of weeks of helpful finance.

"First of all it is not sustainable, If you want to be a sharky assed businessman, there is only so many of those people you can pull in, before word spreads that it is a complete sham," Brown said.

The b*******t from Non-octopus Forex company doesn't stop there. In their literature they proudly claim to be regulated by the European Union. The truth is very different.

"They try hard to be as unregulated as possible," Chris Brown said.

"We had a company that operated in the British Virgin Island and another one in Europe if anyone would ask we would say we are regulated in Europe."

"However (foreign) clients weren't dealing a European regulated company. They did not have the same protection they would have if in fact they were living in Europe.

"It is was clear that we were not going to expand into the (United) States because US regulations are 10 times tighter."

The line from the company's PR people is pretty much what you expect.

Yes, Forex is high risk, there is an element of risk in any investment but people can make profits if they know what they are doing. The company offers training programs, seminars to teach its customers how to trade in Forex. The seminars and training programs and bundled Forex software all add to the company's profit.

But a careful examination of their public statements gives the true picture of what is going on.

"Market makers in foreign exchange trading by default sell positions to and buy positions from their customers. Different buy and sell positions cancel each other out, therefore eliminating the need for netting in the market,"Franziska R, press relations for the company informed me, in response to an email.

In other words the Non-octopus Forex company really is a casino. Give them your money and you are betting against the house and not on the market.

Chris Brown said that as a broker clients would ask him.

"If you are the counter party to my trade, if I lose, you win which is technically true," he said.

"If the client wins the brokerage loses but most people trade poorly because they don't quite understand what they should be doing to maintain share margin.

"If somebody doesn't have limits placed on loses and gains they are going to end up losing at some point."

Like any other casino it is in the house's interest for the customer lose money.
Does any of this matter, this article is not suggesting that the company is breaking any laws. Besides Tallinn has plenty of other casino.

The existence of a major retail Forex company based in Tallinn doesn't mean that the reputation of the country will be damaged. There are dodgy company everywhere.

"The only people who get into Forex market are people who look at the idea of making a thousand per cent (profit) in one day. Those people who are inherently dodgy anyway," Chris Brown said.

It may not be important as the latest political scandal but it is just as sad. The company owners are misrepresenting to the whole World who they are and what they do. If they are running a casino they should call it that. And by these shady dealing they are making locals and ex-pats dislike and distrust a group of people who who everybody is trying so desperate hard to like and trust. I leave it to you to work out who.


Popular posts from this blog

Black men, Estonian women: the truth
By Abdul Turay
Published Postimees 11 November 2009
Well that got your attention; the headline I mean. Any story on this subject, the technical term is miscegenation, is bound to get punters. The yellow media, women's magazines and reality TV shows are obsessed with the subject. Not a month goes by without some publication writing about it. Anne and Style, for example, recently ran a long feature about mixed couples.
Most of these stories are muddle-headed and wrong. There's paranoia in this country that there is an army of dark-skinned men form Turkey, the tropics, some place south, who are going to make off with the nation's women. It's never going to happen. I'll explain why in a minute.
Seriously, I think there are more important things to think about and worry about. I worry about feeding my family. I worry about other people being able to feed their families, so I write about politics and economics.
But the press won't leave…
Galojan will not be coming home soon. By Abdul Turay Published Postimees 27 February 2012
Anna Maria Galojan is quite a boring person. I am bored with reading about her case already. Frankly I am not that interested in her, but since I have some insider knowledge with the system she is facing, I thought I'd share it with you.
Miss Galojan claims that she is not running away by staying in the UK and if she really wanted to run she would have gone to South America.
The reverse is true. I suspect Galojan choose Britain precisely because it the best place for her or anyone else to evade justice.
Britain has a slow and inefficient bureaucracy, especially when dealing with law and order issues. If Galojan has actually claimed asylum like she says, she will be caught in this system, certainly for months and possibly for years.
Countries with a history of dictatorship, often have fast and efficient bureaucracies. Dictators need to sure that they can get rid of political opponents quickly.
The re…
The invisible beautiful Estonian film. By Abdul Turay
Published Postimees 3 May
This time I will move away from talking about politics and talk about culture. Since it is the 100th anniversary of Estonian cinema I might as well add my 50 cents to the debate.
Lets borrow metaphor from that eh...em.... “masterpiece” of contemporary American cinema, Shallow Hall, starring Jack Black.

There is a scene in film where Jack Black asks his co-conspirator that if he was dating the most beautiful women- Linda Carter if you're interested- would he care if everybody else thought she was ugly?”
“No!” his companion says without hesitation
“Because everybody else would be wrong.”
Let's push that concept up a gear. Male readers, would you rather date someone beautiful and invisible or someone plain and visible. How vain are you? Is there point in dating a model if no-one else can see her?
The Estonian film industry is both beautiful and invisible.
Some Estonian film pundits would have you belie…