James McDonald, Forex Trading Scheme, District of Columbia 2018

Washington, D.C. – The Commodity Futures Trading Commission (CFTC) today announced settled charges against eight unregistered entities and eight individuals for illegally offering foreign exchange (forex) and binary options to U.S. retail investors. The enforcement action, filed September 14, 2018, targets operations allegedly preying on inexperienced investors, particularly Millennials.

According to the CFTC, the defendants utilized apps, websites, and social media to solicit customers without proper registration. James McDonald, Director of the CFTC’s Division of Enforcement, emphasized the agency’s concern over the rise of such unregistered operations and the risks they pose to investors. “When customers deal with CFTC-registered entities, they can have confidence that certain required safeguards are in place,” McDonald stated. “Customers can have no such confidence when dealing with unregistered entities.”

The CFTC’s complaint alleges the defendants failed to comply with registration requirements, depriving investors of crucial protections against fraud and abusive practices. While the specific penalties for each defendant weren’t detailed in the release, the settlement signifies an agreement to cease illegal activities and adhere to CFTC regulations. The agency did not disclose the total amount of funds involved or restitution sought.

The CFTC highlighted the importance of verifying a company’s registration status before investing through its SmartCheck website (https://www.smartcheck.gov/). Investors are strongly advised to use this resource to avoid potential scams. The agency also referenced existing customer protection advisories concerning both forex and binary options fraud, outlining common warning signs.

The investigation received assistance from the Financial Supervision Commission of Bulgaria and the Utah Division of Securities. CFTC staff members Paul G. Hayeck, Timothy J. Mulreany, and others were responsible for the case. The CFTC encourages the public to report suspicious activity via its toll-free hotline (866-FON-CFTC) or through online tip submission.

This enforcement action underscores the CFTC’s commitment to protecting retail investors and maintaining market integrity in the increasingly popular, yet often unregulated, forex and binary options markets.

Source: CFTC.gov

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