The UK Insolvency Service is announcing that it has closed down a defunct binary options brokerage. It will bring little comfort to the clients of Metro Options, that deposited funds with it and failed to recover them. UK authorities are once again doing too little too late to combat binary options fraud.
According to authorities, Metro Options was operating between July 2015 and December 2016. The company solicited deposits from over 600 retail clients, to whom it promised unrealistic returns on their investments.
The news comes amid increasing regulatory scrutiny over the industry in the UK and weeks after the FCA officially announced that it is taking over the product’s regulation.
Despite numerous warnings from authorities worldwide, binary options fraud has been common, especially in the European Union. Over the years, many regulatory authorities, led by France’s AMF, have been warning clients about the high risks associated with binary options.
Metro Options took no part in informing its clients about the inherent risks. Instead, it actively solicited people to deposit funds. Before the company was abandoned in December 2016, its website and company sales representatives claimed that clients would profit £400 per £500 trade.
Using the 100% bonus scheme traditional for the industry, Metro Options attracted over £350,000 from unsuspecting clients. The figures were reported to the police via the Action Fraud programme.
What to Look for in a Forex Technology Provider?Go to article >>
In addition to promising bonuses on deposits, the company also claimed that it would refund clients for losses incurred in a 90 day period. After clients lost their deposits and tried to get a refund, the firm stopped communicating with them.
Fake Address and Questionable Directors
As is standard practice with binary options brokers, the firm claimed that it is located in the heart of the financial industry in the UK – Canary Wharf. Metro Options never had an office in London, and its first director quit the company right after it launched.
An individual named Kyle Snoxell, who resigned on the day of his appointment in June 2015, also has a history with other binary options firms as an account manager. He was employed as an account manager at OneTwoTrade for almost a year in 2013.
He shared with the investigators that despite his involvement with the firm, he left due to high upfront costs. In his testimony, he also cites difficulties with an unnamed Bulgarian company that was to be the technology provider for the brokerage.
On the day when Mr. Snoxell left his position, a person named Miklos Attila was appointed as company director. Investigators have not managed to trace him.
Commenting on the case, Chief Investigator at the Insolvency Service, Cheryl Lambert, said: “The Insolvency Service will take action against companies that make unfounded and misleading statements to induce members of the public to invest money.”
Despite the action taken by the UK authorities, officials remain reactive and usually too late to prevent any wrongdoing. Binary options have become a toxic product with FCA-regulated brokers soon to end up as the only ones who can offer the product in the UK.