You were asked to trade foreign exchange (also known as the “Forex”)?
If yes, then you need to know how to identify fraudulent foreign currency.
U.S. Commodity Futures Trading Commission (CFTC), Federal agency to regulate commodity futures and options markets in the United States, warns consumers to take special care to protect themselves from various kinds of fraud committed in the financial markets today, including those with so-called “foreign currency.
A new federal law, Commodity Futures Modernization Act of 2000, it is clear that the CFTC has jurisdiction and authority to investigate and take legal action to close a wide assortment of unregulated firms offering or selling foreign currency futures and options contracts to the general public. In addition, CFTC has jurisdiction to investigate and prosecute foreign currency fraud occurring in its registered firms and their affiliates.
CFTC have witnessed an increase in the number and complexity of financial investment opportunities in recent years, including a sharp rise in foreign currency Scams. While much foreign currency is legitimate, various forms of trafficking in foreign currency have been touted in recent years to deceive the public.
Scams exchange trading often attracts customers through advertisements in local newspapers, radio promotions or attractive websites. These ads may tout high return, low risk investment opportunities in foreign currency, or even high-paid currency trading employment opportunities. CFTC encourages you to be skeptical when promoters of foreign currency trading claim that their services or account management will earn high profits with minimal risks or that employment as a currency trader will make you rich quickly.
The legal understanding of foreign exchange operations
Generally speaking, foreign currency futures and options contracts can be traded legally on an exchange or board of trade, which was approved in the CFTC.
Even where the currency is not approved by the Commission on the exchange or board of trade, commerce can be conducted legally where, generally speaking, one or both parties in the trade (or regulated branch), bank, insurance company, registered broker-dealers of securities, futures trading commission or other financial institution, or a natural or legal person with a high net worth.
Where Forex firms do not fall into the category of regulated entities outlined above and engage in foreign currency futures and options transactions with or for retail customers who do not have high net worths, CFTC has jurisdiction over these companies and their operations.
Warning signs of fraud
If you asked a company that claims to trade foreign currencies and asks for the allocation of funds for these purposes, you must be very careful. Watch for warning signs listed below, and take the following precautions before placing your funds with any company currency.
1. Stay Away from the opportunities, the sound of Too Good To Be True
Get-rich-quick schemes, including foreign exchange, as a rule, are rigged.
Always remember that there is no such thing as free lunches. Be especially careful if you have purchased large amounts of cash recently and are looking for a safe investment vehicle. In particular, retirees with access to their pension funds may be attractive targets for fraudulent operators. To return the money once he disappeared may be difficult or impossible.
2. Avoid any company that predicts or guarantees large profits
Be extremely careful in the companies that guarantee profits, or that Tout extremely high performance. In many cases, these allegations are false.
Below are examples of statements that either are or most likely are fraudulent:
“Whether the market moves up or down on the currency market, you will receive profits.
“Make $ 1000 a week, every week”
“We are exceeding 90% of domestic investment.
“The main advantage of the Forex market is that there is no bear market.”
“We guarantee you’ll be doing at least 30-40% yield over two months.”
3. Stay Away From companies that promise virtually no financial risk
Be suspicious of companies that downplay risks or state that written risk disclosure statements by the usual formalities imposed by the Government.
Currency futures and options markets are volatile and contain substantial risks for unsophisticated customers. Currency futures and options markets, not the place for the posting of any funds that you can not afford to lose. For example, pension funds should not be used for currency trading. You may lose all or almost all of those funds very quickly trading foreign currency futures or options contracts. So beware of companies that make these types of operators:
“With the $ 10,000 deposit, the maximum you can lose is $ 200 to $ 250 a day.”
“We promise to recover any losses you have.”
“Your investment more secure.”
4. Do not trade on margin if you understand what it means
Margin trading can make you responsible for losses that greatly exceed the dollar amount you deposited.
Many currency traders ask customers to give them money, which is sometimes called the “margin,” often sums in the range from $ 1000 to $ 5000. However, those amounts are relatively small in the currency markets; actually control far larger dollar trade, the fact that is often poorly explained to customers.
Do not trade on margin unless you fully understand what you are doing and are prepared to accept losses that exceed the amount of the difference you paid.
5. Question firms that claim to trade in the “interbank market”
Be wary of firms that claim that you can or should trade in the interbank market, or that they will do so on your behalf.
Unregulated, fraudulent companies, currency trading is often said retail customers that their funds are sold in the interbank market “where good prices can be obtained. Firms that trade currencies in the interbank market, however, likely to banks, investment banks and large corporations, because the term “interbank market” refers only to a loose network of currency transactions negotiated between financial institutions and other large companies.
6. Be wary of sending or transferring cash on the Internet, by mail or otherwise
Be especially attentive to the dangers of trading online, it is very easy to transfer funds to the line, but it is often impossible to obtain redress.
It is the Internet advertiser just a penny a day to reach a potential audience of millions of people, and fake currency trading firms have seized upon the Internet as an inexpensive and effective way to reach large numbers of potential customers.
Many companies offer currency on the line are not located in the United States and can not display an address or any other information identifying their nationality on their Web site. Remember that if you transfer funds to those foreign firms, it can be very difficult or impossible to recover your funds.
7. Scams currency often directed at ethnic minorities
Some fraudulent currency target potential customers in ethnic communities, particularly persons in the Russian, Chinese and Indian immigrant communities, through advertisements in ethnic newspapers and television “advertising.”
Sometimes these ads offer so-called “jobs” for “management attention” to trade foreign currency. Keep in mind that “the attention of managers” are hired, that would be expected to use their own money for currency, as well as to recruit their family and friends to do the same. That seems a promising opportunity to work often is another way many of these companies lure customers into parting with their cash.
8. Make sure that you receive Performance Track Record Company
Get as much information about the company or a separate report on the execution on behalf of other clients. You should know, however, that it may be difficult or impossible to do, or to verify the information you receive. Although companies and individuals are not obliged to provide this information, you should be wary of anyone who is not willing to do so or who provides you with incomplete information. However, keep in mind, even if you get a glossy brochure or a complex type of diagrams that the information contained therein may be false.
9. Do not deal with those who will not give you their background
The plan needs to be done check any information you receive to make sure that the company is and does exactly what it says.
Get a background of working or moving company, if possible. Do not rely solely on oral statements or promises from employees. We ask all the information in writing.
If you can not satisfy himself that the person with whom you communicate in an entirely legitimate and honest and wise course of action to avoid the sale of foreign currencies through those companies.
10. Warning signs of the goods “Come-Ons”
If you requested the company to purchase commodities, watch for warning signs listed below:
Avoid any company that predicts or guarantees large profits with little or no financial risk.
Be careful with high-pressure tactics to convince you to send or transfer money directly to the firm, overnight delivery companies, the Internet, by mail or otherwise.
Be skeptical about unsolicited phone calls about investments from offshore vendors or companies with whom you are unfamiliar.
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