Forex trading frauds

Forex trading frauds

Posted: Morphey Date: 07.07.2017

Exploring Scams Involved With Forex Trading

The advertisements seem too good to pass up. They tout high returns coupled with low risks from investments in foreign currency forex contracts.

Sometimes they even offer lucrative employment opportunities in forex trading. Do these deals sound too good to be true?

Unfortunately, they are, and investors need to be on guard against these scams. They may look like a new sophisticated form of investment opportunity, but in reality they are the same old trap—financial fraud in fancy garb. Forex trading can be legitimate for governments and large institutional investors concerned about fluctuations in international exchange rates, and it can even be appropriate for some individual investors. But the average investor should be wary when it comes to forex offers.

forex trading frauds

The Commodity Futures Trading Commission CFTC and the North American Securities Administrators Association NASAA warn that off-exchange forex trading by retail investors is at best extremely risky, and at worst, outright fraud.

Forex contracts involve the right to buy or sell a certain amount of a foreign currency at a fixed price in U. Profits or losses accrue as the exchange rate of that currency fluctuates on the open market. It is extremely rare that individual traders actually see the foreign currency.

Instead, they typically close out their buy or sell commitments and calculate net gains or losses based on price changes in that currency relative to the dollar over time. Forex markets are among the most active markets in the world in terms of dollar volume.

The participants include large banks, multinational corporations, governments, and speculators. Individual traders comprise a very small part of this market.

Forex scams attract customers with sophisticated-sounding offers placed in newspaper advertisements, radio promotions, or on Internet sites.

Promoters often lure investors with the concept of leverage: Coupled with predictions about supposedly inevitable increases in currency prices, these contracts are said to offer huge returns over a short time, with little or no downside risk. The CFTC is the Federal agency with the primary responsibility for overseeing the commodities markets, including foreign currency trading. Many state securities regulators also have the right under their state laws to take action against illegal commodities investments.

Sometimes the CFTC and the states work together on cases.

Foreign Currency Trading - CFTC

If you are solicited by a company that claims to trade foreign currencies and asks you to invest funds, you should be very careful. Watch out for the following warning signs:. Be wary of promises that sound too good to be true: Be skeptical about unsolicited phone calls offering investments, especially those from out-of-state salespersons or companies that are unfamiliar. Be especially cautious if you have acquired a large sum of cash recently and are looking for an investment vehicle.

forex trading frauds

In particular, retirees with access to their retirement funds may be attractive targets for fraudulent operators. Getting your money back once it is gone can be difficult or impossible. Be wary of high-pressure efforts to convince you to send or transfer cash immediately to the firm, via overnight delivery or the Internet.

Be smart about the money you do put at risk. Even when purchased through the most reputable dealer, forex investments are extremely risky.

forex trading frauds

If you are tempted to invest, make sure you understand these products and above all, only invest what you can afford to lose. Investors should make sure that anyone offering a forex investment is properly licensed and has a reputable business history. The public can obtain information about any firm or individual registered with the CFTC, including any actions taken against a registrant, through the National Futures Association NFA Background Affiliation Status Information Center BASIC , available on the NFA website at: You can also find out if someone is registered by calling the National Futures Association at In addition, if you think that you have been a victim of a forex scam, you can report suspicious activities or information to the CFTC in the online form on the this website, or by mail addressed to the Office of Cooperative Enforcement, CFTC, 21st Street, NW, Washington, D.

The securities regulator in your state or province also may be able to help. Commodity Futures Trading Commission.

Transparency International Contact Us. Avoid Fraud CFTC Fraud Advisories Foreign Currency Trading.

Global banks admit guilt in forex probe, fined nearly $6 billion | Reuters

Foreign Exchange Currency Fraud: The Whistleblower Program provides monetary incentives to individuals who come forward to report possible violations of the Commodity Exchange Act. Resources Budget and Performance Educational Material Privacy Policy Web Policy FOIA EEO Statement No Fear Act Inspector General USA. Actions CFTC Regulations Commodity Exchange Act Public Comments Tips and Complaints Industry Filings Whistleblower.

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CFTC Headquarters Three Lafayette Centre 21st Street, NW Washington, DC

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