Global Posts

I got this definition of “BOILER ROOMS” from Investopedia, (http://www.investopedia.com/terms/b/boilerroom.asp), and it clearly describes the method of approach used by PCPI and other scam operators.

“A place where high-pressure salespeople use banks of telephones to call lists of potential investors (known as a “sucker lists”) in order to peddle speculative, even fraudulent, securities. A boiler room is called as such because of the high-pressure selling.

A broker using boiler-room tactics gives customers only positive information about the stock and discourages them from doing any outside research. Boiler-room salespeople typically use catchphrases like “it’s a sure thing” or “opportunities like this happen once in a lifetime”

The SEC (http://www.sec.gov/answers/boiler.htm) further describes this as an operation conducted by dishonest brokers.

PIPC was a “boiler operation” under both definitions. But there is more to it than meets the eye.  PIPC may have bandied around that it has an account with ABN-AMRO but the fact is, it is not a foreign currency trading account but a mere fund depository account.  Their clients were probably misled into believing that their funds will be traded through the bank and will earn the promised interest.

During my own stint with a similar company closely associated with Michael Liew, I found out that their group, all “boiler room” operators, ( and mind you me they belong to only one group) have one clearing house for all their transactions and this is based in Macau. Whether this Macau operation is legitimately funneling all invested funds to the interbank market or not is something I did not have the chance to verify.

Here is what I surmise to have transpired with Michael and his PIPC!

On his own, Michael Liew may have conducted a foreign currency pool operation, pooling together his clients funds and trading them himself without his clients’ knowledge. The guaranteed profits can come from roll-over interest earnings on certain currency placements such as swiss francs which gives substantial daily roll over earnings on certain placements. But ahh, these interest earnings can be wiped out overnight if the price starts churning against his position.  if this is what he did, and if the price did turn against his position, he really would have no choice but pack up and run as what the likes of him have done in the past. If his placements have deteriorated in value substantially, he knows he can not run away from his Macau connections. The choice was clearly to pack up and go, pay up his Macau connection and hide under their protection; or stay and face the charges that clearly will be slapped on him by his clients here in the Philippines. Evidently, he chose to flee from his clients and is now probably sipping tea with his benefactors and associates in Macau.

In forex markets all transactions involve buying and selling, one currency can be borrowed and used to finance the purchase of another currency.If you want to hold overnight positions you will have to pay interest rate n that currency.Interest roll over fees are determined by various central banks and federal agencies. Whenever economies are growing at a very rapid rate federal agencies increase the interest rate to slow down the growth.High interest rates is one of the tools used to combat inflation.the opposite is done when economy is slowing down.the interest rates are reduced to make money easily accessible which will help growth.
Eg:John buys GBP/USD at 1.5755. Since he has borrowed USD he will pay interest on that.However he will receive interest on GBP.If the bank of England which regulates the pound increases interest rate john will earn interest and vice verse.
Rollover Eg:Bank of England rate is 4% while federal reserve has rate of interest of 1.25%.This has to converted to daily basis since interest rates are calculates on daily basis.

Formula: No of lots X No of units per lot X yearly intrest rate differential /360 X No of days.