Foreign exchange fraud
Foreign exchange |
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Exchange rates |
Markets |
Assets |
Historical agreements |
See also |
Foreign exchange fraud is any trading scheme used to
The foreign exchange market is at best a zero-sum game,[2] meaning that whatever one trader gains, another loses. However, brokerage commissions and other
US Government interventions
In August 2008, the CFTC set up a special task force to deal with growing foreign exchange fraud.[3] In January 2010, the CFTC proposed new rules limiting leverage to 10 to 1, based on "a number of improper practices" in the retail foreign exchange market, "among them solicitation fraud, a lack of transparency in the pricing and execution of transactions, unresponsiveness to customer complaints, and the targeting of unsophisticated, elderly, low net worth and other vulnerable individuals".[4]
In 2012, Christopher Ehrman, an SEC veteran, was selected to run the new SEC Office of the Whistleblower.[5]
Types of fraud
Frauds might include churning of customer accounts for the purpose of generating commissions, selling software that is supposed to guide the customer to large profits,[6] improperly managed "managed accounts",[7] false advertising,[8] Ponzi schemes, and outright fraud.[9][10] It also refers to any
Increase in fraud
The U.S. Commodity Futures Trading Commission (CFTC), which regulates the foreign exchange market in the United States, has noted an increase in the amount of unscrupulous activity in the non-bank foreign exchange industry.[12] Between 2001 and 2006, the CFTC has prosecuted more than 80 cases involving the defrauding of more than 23,000 customers who lost US$350 million. From 2001 to 2007, about 26,000 people lost US$460 million in forex frauds.[1]
Not beating the market
The foreign exchange market is a zero-sum game[2] in which there are many experienced, well-capitalized professional traders (e.g. working for banks) who can devote their attention full-time to trading. An inexperienced retail trader will have a significant information disadvantage compared to these traders.
Retail traders are undercapitalized. Thus, they are subject to the problem of
Although it is possible for a few experts to successfully
High leverage
By offering high
Fraud by country
To aid with transparency, some regulatory authorities openly publish the following: list of regulated companies/firms, warnings to regulated companies, cases opened against regulated companies, fines levied to regulated companies, revocation of companies license as well as general news announcements.
United Kingdom
The Financial Conduct Authority (FCA) website lists guides to aid with avoiding fraud/scams as well as public list of warnings recorded by the FCA.
- Official FCA Investment Firm Warning List
- Online guide on how to avoid scams[16]
- FCA Guide on how to report a scam[17]
- FCA Investment Scam support website[18]
- FCA News on Investment Firms[19]
Cyprus
The Cyprus Securities and Exchange Commission (CySEC) provides public access to information regarding the process for how to obtain a CIF authorisation as well as listed the current and past CySEC authorised companies.
- List of current 'Cyprus Investment Firms' (CIFs)[20]
- List of former Cyprus Investment Firms[21]
- List of issued CySEC Warnings[22]
- List of announced Board Decisions (including fines)[23]
Convicted scammers
See also
- Boiler room
- Bucket shop
- Foreign exchange market
- Forex scandal
- Fraud
- Gambler's conceit
- Gambler's ruin
- High-yield investment program
References
- ^ a b Lindsay, Daniel (2014-01-20). "Regulatory Holes Provide A Playground For Forex Fraudsters". mahifx.com. Archived from the original on 2014-02-03. Retrieved 2014-01-28.
- ^ ISBN 978-0-89930-499-1.
- ^ "CFTC establishes task force on currency fraud". USA Today. Associated Press. 2007-08-11. Retrieved 2015-11-14.
- ^ The Federal Register Archived 2010-08-28 at the Wayback Machine Section E. The Commission's Proposed Rules
- ^ Rachel Louise Ensign. "Q&A: Christopher Ehrman, Director, CFTC's Whistleblower Office". WSJ.
- ^ SOFTWARE VENDOR CHARGED CFTC News Release 4789-03, May 21, 2003
- ^ CFTC complaint Archived 2006-03-01 at the Wayback Machine Forex Advisory Firm and Trade Risk Management Firm Charged With Fraud
- ^ Fraud charges against multiple forex Firms Archived 2006-04-21 at the Wayback Machine Commodity Futures Trading Commission (CFTC) Release: 4946-0
- ^ "Forex Fraud Investor Alert Archived 2008-10-29 at the Wayback Machine". North American Securities Administrators Association, accessed January 12, 2008
- ^ Foreign Currency Fraud Action Archived 2006-06-14 at the Wayback Machine Commodity Futures Trading Commission (CFTC) vs. Donald O’Neill
- ^ FOREX Advisory Commodity Futures Trading Commission's FOREIGN CURRENCY TRADING FRAUDS
- ^ "Foreign Currency Trading". Retrieved 2019-09-17.
- ^ "Foreign Exchange Controls". Top Forex News. Retrieved 17 December 2013.
- ^ Egan, Jack (2005-06-19). "Check the Currency Risk. Then Multiply by 100". The New York Times. Retrieved 2007-10-30.
- ^ Elam, Yohay (2016-01-28). "Beware of brokers offering high leverage". Forex Crunch. Retrieved 2020-01-25.
- ^ "How to avoid scams - Financial Conduct Authority". fca.org.uk.
- ^ "Report a suspected scam". fca.org.uk.
- ^ "Consumers - Financial Conduct Authority". fca.org.uk.
- ^ "News". fca.org.uk. Archived from the original on 2015-06-10.
- ^ "Cyprus Securities and Exchange Commission - INVESTMENT FIRMS (CYPRIOT)". cysec.gov.cy.
- ^ "Cyprus Securities and Exchange Commission - FORMER INVESTMENT FIRMS (CYPRIOT)". cysec.gov.cy.
- ^ "Cyprus Securities and Exchange Commission - CYSEC WARNINGS". cysec.gov.cy.
- ^ "Cyprus Securities and Exchange Commission - BOARD DECISIONS". cysec.gov.cy.
- ^ "Owners of currency exchange business that made $600 million convicted of fraud" (Press release). Georgia, USA: U.S. Attorney’s Office, Northern District of Georgia. Department of Justice. 2018-10-10. Retrieved 2018-11-20.
- ^ "Poliisi - 404". poliisi.fi. Archived from the original on 2015-05-10.
- ^ Helsinki Times Over 700 criminal complaints on WinCapita -Finnish police, August 13, 2008