The UK’s Financial Conduct Authority (FCA) has released a warning against an unregulated company, London Global Markets, labelling it a ‘clone firm’ for its attempt at passing as an already authorized financial entity which goes by the name LGM Investments.
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The FCA added that scam brokers use this tactic in order to confuse clients, making them believe that the company is not only authorized but that it is actually the company it is impersonating. This kind of fraudulent broker might use the name of the real firm, its firm reference number (FRN) given by the regulator, or any other available details. The FCA advises clients to search for companies on the Financial Services Register on its website before signing up and investing with a broker.
Recently, Finance Magnates reported that the FCA warned the trading public against ExxonFX, which was interacting with clients without proper authorization. In both cases, the British regulator requests the community’s assistance in reporting brokers that might be running scam operations. “If you think you have been approached by an unauthorised or clone firm, or contacted about a scam, you should contact us. If you were offered, bought or sold shares, you can use our reporting form.”
The FCA further states, however, that it will not be responsible for any damages or financial loss if a client chooses to trade with an unregulated broker. “You should be aware that if you give money to an unauthorised firm, you will not be covered by the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) if things go wrong.”