Hello Everyone,

What I am about to say I something that I had hoped we would avoid, however circumstances have dictated that we must take action now, and that action is not going to be popular for some of you.

I will start at the beginning, many of you may remember way back when we first started we were using ACM in Switzerland as the broker for our Pool Account, and then switched over to FXCM in February so we could run the Managed Accounts.

The problem started when we took our money out of ACM, because of their strict Anti Money Laundering Regulations the money had to be returned to the account which was on file held with them. The account in question at that time was our old Danish Corporate Account. The money withdrew from ACM without a problem, however as soon as it hit the Danish Account, the Danish Financial Authorities were all over it.

Ken was called in by the Ministry of Finance to prove what this money was, which we promptly did. However this did not satisfy them and they refused to release the money in the account to us for onward transportation. After taking legal advice it was clear that we were not going to be getting this money back and the Ministry of Finance went so far as to say that they are keeping this money so that they would not charge Kenneth with breaching Financial Law in Denmark for the handling of other people’s money. In short we had no option but to accept their token offer and move forward.

After this and following the deposit of all the money that was at the time held in E-gold and the Cyprus Bank Account we were at a position of being at 50% liquidity.

We had two options at this point, we could either immediately reduce everyone's balance by 50% or trade back the difference through our own gains from trading to top the fund up. Obviously we choose the later.

We did in fact manage to successfully get the fund up to around 70-75% liquidity by putting our own money into the account from the trading returns…..and in hindsight it was here that we should have taken the measures that we now have no choice but to take. We did not however foresee the huge amount of withdrawals that would occur in the following months which have reduced us again to around 30% liquidity.

This is not a situation that can continue and to ensure that the fund remains liquid and here for the long term, we must take the following steps. These measures are probably not going to be popular with some of you, however they are required.

This is what we must do effective immediately.
1) Freeze all Balances as per the September Statements for the next 3 months
2) Suspend all Withdrawals – Pending and Future – for the next 3 months
3) Return all deposits made this month to their account of origin.

We are truly sorry if this does impact on you particularly if you have requested a withdraw in October, as the last thing that we wanted to do was cause people hardship. However we must do this for the long term stability of the fund for the coming years.

Many of you have already said to me that this is a necessary course of action and have understood the reasons for doing it. At the end of these three months we will be able to re-e.valuate where we are again and look to move forward.

I would like to emphasize that if we do not take action now, then the entire fund could be in jeopardy of liquidizing over the course of a few months.

We are very truly sorry that we must do this, and are aware that this will tarnish our otherwise good reputation. The only good thing that we can say about this situation is that the trading has been good and we are not going anywhere, we have a substantial client base so we will get through this……we just wished we had jumped on it a little sooner than now!!

We are both very upset about having to do this, and aware that many of you will be disappointed in us getting to this position. I would like to thank many of you who are already aware of this and the understanding that you have shown.

This is costing us both personally a great deal of money as we have been depositing our own personal funds and trading commissions into the account to get the liquidity to a reasonable level, only for it to get back to this situation again. We however will continue to do this until this problem is resolved to the very best of our ability and use the coming months to get us back on track and moving forward.

In the years to come, this will just be a bump on the road, but it is one that we must cross now. After the 3 months have passed we will see where we are, until then Ken will continue to trade and we will be putting our own trading funds back into the fund to bolster it up.

I am sorry that I don’t have better news, and I am sorry if you have a pending withdrawal made this month.

Moving forward we had always planned to separate the Pool Account from Northsea more directly so that we could become FSA compliant and have already made investment into doing this. Over these three months we will further this goal so that the future will be far better for all and will keep you updated on the progress.

Yours,
Paul and Ken