Beware of Forex Trading Scams
According to the Commodity Futures Trading Commission (CFTC) a number of forex trading scams have been unleashed on the unsuspecting public. In December 2000 a new federal law (the Commodity Futures Modernization Act of 2000 (CFMA)) made it clear that the Commission has the right to examine and close down unregulated firms offering or selling foreign currency futures and options contracts.
The CFTC states that it also has the right examine and prosecute foreign currency fraud where this occurs in any registered firms and their affiliates. For this reason the CFTC has issue a warning dealing with such scams and revised its 1998 Consumer Alert on foreign currency trading. This in an effort to help the public to recognize and identify forex trading scams.
These documents remind the public that any off-exchange trading of foreign currency futures and options contracts with unregulated firms is illegal. Such forex trading scams are not to be entertained by investors.
The Consumer Alert states that the public needs to be aware of sales being solicited via newspapers, radio or television promotions, or Internet sites. These marketing ploys promise high-return, low-risk investment opportunities in forex trading. They also offer or promise lucrative currency-trading employment.
Potential investors need to be cautious and skeptical of such exaggerated claims and suggests some "red flags" to look for, and cautionary steps to take, before trading foreign currency products. The following articles dealing with forex trading scams can be obtained at: http://www.cftc.gov/enf/enfforex.htm:
* Division of Trading and Markets Advisory Concerning Forex Trading By Retail Customers - March 2002
* Advisory on Foreign Currency - February 5, 2001
* Consumer Alert: "Beware of Foreign Currency Trading Frauds" - February 8, 2001
* Questionnaire Form - to report information to the CFTC regarding forex (or other commodity futures or options) activities
* Beware Of Easy Profits From Buying Precious Metals And Other Commodities, July 5, 2000;
* Beware Of Internet Websites Selling Commodity Trading Systems That Guarantee High Profits With Minimal Risks, May 1, 2000;
* Sales Pitch Based On Seasonal Demand And Other Public Information, March 30, 1998.
(courtesy http://www.cftc.gov/enf/enfforex.htm)
