Wednesday, July 17, 2013

SEC Halts Texas-Based Forex Trading Scheme

By Tim Dulaney, PhD and Tim Husson, PhD

The SEC recently halted a foreign exchange ('forex') trading scheme run by Kevin G. White, an unregistered Plano, TX-based money manager.1  White raised $7.1 million of investor capital through KGW Capital Management and Revelation Forex Fund representing that Revelation had achieved returns of approaching 400% since January 2009.2

Investors should realize that such persistent outsized returns are extremely unlikely.  Indeed, bank and brokerage records reveal that the Revelation Forex Fund did not begin trading until September 2011 and since that time has realized nearly $2 million in realized and unrealized losses through May 31, 2013 according to the SEC complaint (PDF).  In addition to these investment losses, White has allegedly misappropriated approximately $1.7 million of investor funds for personal use or for unrelated business ventures.

White also misrepresented his education as well as a "25 year Wall Street career." White's career included only six years in the 1980's before being barred from the NYSE for conducting unauthorized trades in customer accounts and distributing misleading statements to customers and regulators, etc.  Investors would have known this had they checked FINRA's BrokerCheck report on Mr. White (CRD# 1020670).

Investors who took the bait on other "opportunities" associated with KGW Capital (State of Texas Real Estate Fund, Meridian Propane Fund, KGW Energy Notes and KGW Tax-Free Certificates of Deposit) should probably begin taking a hard look at these investments since they are not registered with the SEC, the CFTC or FINRA.  Investors should ask the tough questions when being faced with purported financial gurus who promise to deliver fortune with relatively few details.
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1 The CFTC is pursuing parallel criminal charges.
2 The SEC has warned investors before (PDF) about the risks of forex trading.

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