Trading binary options may seem tempting depending on your situation, but
come with an extremely high level of risk due to the fact that they are
all-or-nothing propositions – when they expire, you either lose
your entire investment or make a pre-determined sum of money. Fraudulent
schemes, many of which originate outside of the country, only add to the
risk level of these binary options.
The Financial Industry Regulatory Authority (FINRA) recently reported that their
Securities Helpline for Seniors has received a number of calls that indicate a worrying number of binary
option scams are making the rounds. According to callers, they have received
offers from firms claiming to be binary options trading firms. However,
these scammers require payment to receive an investment return, refuse
to return any funds, and fail to deposit the funds investors pay in their accounts.
At least one caller reported a scammer claiming to be a representative
from a regulatory organization accusing them of taking part in illegal
binary options trading, and demanded that the recipient of the call pay
them a fine. Other callers have reported instances where scammers claim
to be able to return investor’s funds once they pay an advance fee.
Both the Securities and Exchange Commission (SEC) and the Commodity Futures
Trading Commission (CFTC) have received calls reporting similar issues.
Investors considering binary options need to take care when receiving these
types of calls from companies outside the United States in order to avoid
becoming the victim of one of these scams. This includes demo accounts
that allow investors to test trading binary options without risking personal
assets and applications that imply a quick and simple path to wealth.
Scammers pay attention to these types of accounts in order to determine
who to target with offers of “real” trading accounts or by
requesting personal information in order to commit identity theft.
If you have already opened an account, keep a close watch for any signs
of fraud including:
- Requests / pressure to send additional funds
- Excuses when asked why the firm is unable to credit gains to your account
- Excuses when asked why an account cannot be closed
- Excuses when asked why the firm cannot send alleged gains to you
Protect Yourself Before You Invest
Perform a background check on any individual or firm using
FINRA’s BrokerCheck before you make any investment.
SEC’s website to see if the binary options trading platform is properly registered,
and take a look at registered trading platforms to see if it’s listed.
CFTC’s website to check whether or not the binary options trading platform is a designated
contract market. As of this alert, only three markets offer binary options.
Check whether or not the binary options trading platform is registered
with the SEC to offer and sell their product through the
SEC’s EDGAR system.
Unfortunately, people can still fall prey to these types of scams no matter
how prepared and cautious they are. If you lost money by investing in
one of these scams, contact one of the investment fraud attorneys at Meyer
Wilson today. We have helped thousands of victims of fraud recover their
losses, and handle all cases on a contingency fee basis – you won’t
owe us any legal fees until we help you recover your lost funds. Call
us at one of our four locations today, or
fill out our online form to start out with a free case consultation.