U.S Watchdog Warns of Binary Options Related Scams

The Financial Industry Regulatory Authority says its helpline for seniors received a number of calls regarding binary options.

The American Financial Industry Regulatory Authority (FINRA) issued a warning to the public today about the dangers of trading binary options with unregulated providers. It claims trading binary options can be an extremely risky proposition as they are all-or-nothing propositions which are made even riskier by fraudulent schemes, many of which originate outside the United States.

FINRA is an independent, not-for-profit organization authorized by the U.S Congress to protect investors and to make sure that the securities industry operates fairly and honestly. It operates a recently launched “Securities Helpline for Seniors,” where elderly Americans can report and complain about issues in the financial markets.

The watchdog says it has received a number of calls that suggest that scams involving binary options and their trading platforms abound. Callers reported situations in which firms claiming to be binary options trading firms do not deposit investor funds into the investor’s account, deny requests to return funds, or require a fee to be paid in order to receive a return of their investment assets.

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In at least one situation, a fraudster posing as a regulatory organization accused the investor of engaging in illegal binary options trading and demanded payment of fine money. FINRA says it is also aware of instances in which an investor is contacted by a firm claiming to be able to get the investor’s money back for an advance fee.

In the highly regulated U.S market only two venues are legally allowed to offer binary options trading- Cantor Exchange and Nadex. FINRA cautions investors who are considering binary options to be particularly wary of non-U.S. companies that offer binary options trading platforms.

The watchdog even warns about just opening demo accounts, saying that such accounts can serve as bait to lure investors into sending money to fund a ‘real’ trading account, or open the door to identity theft by requesting an array of personal information.

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