Binary Options Regulations – Unauthorized Brokers Challenge Regulators
Unauthorized brokers are challenging regulators by offering their services in countries that have not approved and licensed them. Regulators around the world are having a hard time keeping track of them all. In some cases even finding the unregulated brokers is not an easy task and dealing with the people behind the scam is almost impossible. Authorities have their hands tied; they can do little more than issue a warning against a company and hope that future clients will do their own research in order to avoid them. The problem is that warnings are often misdirected and reflect negatively on reputable and regulated brokers that are not even involved.
While authorities struggle with the task of warning potential clients scam companies continue to operate. They use a number of tactics including false claims of regulation or by cloning the names of known and regulated brokers to camouflage their scheme. New victims are being dragged into these fake websites everyday by illegal methods that count as criminal offense in many jurisdictions. Email and telemarketing solicitation is the typical method of client acquisition used by the unlicensed companies. Usually, after the clients has already lost their investment in their previous account they get contacted to invest in another firm. They make the clients interested by offering them new ways of recuperating their losses by making them deposit more money in an unregistered platform.
Scam Brokers Are More Slippery Than Ever
Some companies have been found to operate several different brands and platforms in order to solicit more clients in selected regions. In Missouri, authorities have found overseas companies telling clients they are exempt from registration with regulators due to them not being located in the US. Other companies use fake addresses and register virtual mail addresses in London with the actual physical office somewhere hidden – making it hard for authorities to find. Still others take the scam one step further, falsely claiming they are regulated by CySec, FCA or other securities regulators in a bold faced lie.
The Canadian AMF warns investors against companies based mainly in Cyprus and the UK that target Quebeckers. These companies are not licensed in Canada and the AMF adds that getting your money back can be difficult and there is a risk for identity theft. In Italy, Consob has blocked access to many binary options brokers that are operating fraudulently and listing them on their website whilst adding more scams to the list. The problem is that many of the brokers on both lists are in fact CySEC regulated, just not approved to operate in Canada or Italy.
Unauthorized and Unregistered Brokers Are A Tough Challenge
There is still no international regulator of binary options to keep worldwide traders safe. Even though regulators are doing their best to cope with all the new investing opportunities they are one step behind the scams pulled by shady binary options companies. For now, all authorities can do is to advise traders to check with a regulator before investing with a company. In conclusion, most of the due diligence must still be done by the clients themselves and if something seems too suspicious you are best to report it or stay away. I leave you with what Tony Hetherington wrote on thisismoney.co.uk about a scam broker named NRGbinary; “nobody should touch NRGbinary, not even with a bargepole dipped in disinfectant”.