Regulators Crack Down on Off Shore Brokers – Reaching Massive Settlement

Regulators Crack Down on Banc De Binary – Reaching Massive Settlement

Regulators are truly proving their effectiveness by reaching massive settlements and cracking down on offshore brokers. The US CFTC is the regulator drawing most of the attention with a big settlement with one of the biggest binary options brokers and one long known to be less than the best, Banc De Binary. Even so, it’s not all downhill for regulators and regulated brokers as there is much room for improvement before we can see a healthy and scam free binary options industry.



Banc de Binary and CFTC – an 11$ Million Settlement

Banc de Binary, a CySEC regulated firm, an old timer in the binary options industry and sponsor of the Liverpool Football Club reached an 11 million dollar settlement with CFTC. This case started in 2013 when CFTC sued the firm for illegally pursuing US clients. It involves more than 6,600 clients that Banc de Binary solicited by using a fake virtual address in the US.


The result, roughly 9 million USD will be shared among the thousands of solicited clients. The remaining are to be paid in civil penalties and a $150,000 sum to be paid by Banc de Binary’s founder, Oren Laurent. The company states that it neither admits nor denies the allegations but this is a normal response to avoid further damage when a guilty company is under investigation. Basically, Banc de Binary’s choice to settle can be seen as damage control and a way to avoid more negative publicity.


This isn’t the first time that Banc de Binary has been warned or sued. This company has been warned several times before and by different authorities, including CySEC which has also issued multiple fines against them this year alone,. To date the CySEC fines are total nearly 400K USD together.


Moreover, the Australian and New Zealand regulators have both issued warnings against Banc de Binary as the firm is unauthorized to offer their citizens financial services. Even though this broker is regulated by CySEC, they are limited to overseeing the actions of the regulated brokers in their own jurisdiction. The bottom line is that Banc De Binary continues to skirt the rules wherever it can so beware.


The CFTC’s work does not end with Banc de Binary. Another firm to taste the power of this US regulator is Vision Financial Partners. The founder, Neil Pecker, is now being charged for fraud and solicitation. This time, the CFTC has cooperated with two other regulators, the UK’s FCA and the Cypriot’s CySEC which apparently was a wise choice due to the fact that all fraudsters have been identified and charged.



Challenges when Regulators Shape the Industry

In an interview with Shy Datika, Anyoption’s CEO, he mentioned the challenges and difficulties with regulators. Although regulators can help protect clients, they also need more insight in the binary options industry and the lack of it can cause problems for the clients and the industry in general.


Datika further says that unregulated firms have an advantage over the regulated firms because they can avoid the time and funds that are required to keep up with the regulatory demands. Instead, they can act as they please together with their unregulated affiliates. On the plus side, thanks to the US CFTC’s recent crackdown on unregulated binary options brokers and their massive fines, the future of the industry still looks bright, hopes Shy Datika.



Regulators Can Make Improvements

These settlements are good news to traders who can rest assure authorities will hunt down offshore brokers to get justice. A broker being fined and investigated so many times can really harm their reputation and scare off future clients. Not to mention how it forces the investigated company to change their behavior in order to avoid future embarrassment. Still, there is room for improvement which is something that Shy Datika has pointed out. He suggests that regulators and banks should join forces and restrict unregulated firms from accepting money as it would make it very hard for new white labels and as a result; make the industry safer for traders.