In response to a growing number of complaints about unauthorized forex trading and brokerage firms, Britain’s Financial Conduct Authority (FCA) recently published advice to help investors avoid scams and instruction to guide them if and when they discover that they have been victimized.
The advice also applies to fraudulent binary options schemes, contracts for difference (CFDs) and commodities. All such scams promise very high returns and guaranteed profits, either through a managed account through which the firm claims to trade on the investor’s behalf or by giving the investor the false impression that he is trading himself by using the firm’s own proprietary platform.
“Most consumers report they have initially received some returns from the firm to give the impression that their trading has been a success,” the FCA reports. “They will then be encouraged to invest more money but at this stage or soon after the returns stop, their account is suspended and there’s no further contact with the firm.”
The FCA warns that many bogus trading and brokerage firms claim to be licensed to conduct business in the United Kingdom when in fact they are not. Others may usurp a real firm registration number (FRN), corporate address and names of employees of a legitimate company that is indeed are FCA authorized. These are known as “clone firms.” The scammers, of course, then substitute their own phone numbers, addresses and website links, and should you notice the inconsistency, they will claim that the FCA Register is out of date. In certain cases, scammers have even been known to copy the website of an authorized forex trading firm and change only the phone number. Scammers located overseas, of course, will not even pretend that their contact details are listed in the Register.
The FCA maintains a list of fraudulent brokerages and urges all investors to consult it in advance. Good advice.