From Cloning Financial Planing Firms to Unregulated Binary Options

Italian, Swiss and UK regulatory bodies are actively providing information about unregulated firms offering financial services illegally

Several European regulators in recent days have issued warnings against forex and binary options operators which are providing financial services without being authorized. The phenomenon has been a major issue for the reputation of the industry and has caused damage to a number of brands which are operating legally and paying their fees and taxes.

Aside from the cost advantage which such companies are gaining, their practices are frequently questionable to outright fraudulent. A number of unregulated companies especially in the binary options and forex segments are operating without ever allowing their depositors to withdraw their funds.

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Italian financial regulator CONSOB, the Belgian FSMA, Switzerland’s FINMA and the U.K. Financial Conduct Authority have been the most proactive watchdogs in recent days.

Unregulated binary options brokers

On Friday Swiss regulator FINMA warned against a couple of binary options companies – Plustocks and GET Binary and on a clone firm using a suspended license named Plus Capital Group. Both binary brokers have not been registered in Switzerland and have their address of incorporation listed in London.

The first duo of companies is the typical case of an unregulated and unregistered company offering its services in a country where it isn’t allowed to. The Swiss regulatory framework for financial services providers such as forex brokers is obligating them to be registered in the country as a bank.

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The Swiss market has been particularly lucrative due to the high savings rate and the very low if not negative interest rates which commercial banks are offering to their clients. Dominated by a few local players, the market has been recently targeted by IG Group, as the company obtained a Swiss banking license last year.

Another set of “clones”

This is where the second FINMA warning comes in as it is related to a so called “clone firm”. The entity operating the website Plus Capital Group is allegedly based in Panama. The company is displaying a page of being associated with MIG – a brokerage formerly operating in Switzerland before rebranding to MIG Bank and subsequently being taken over by Swissquote.

Managed accounts services offered by the unknown entity Plus Capital Group is targeting investors without providing them with any guarantee with the website claiming that its broker is the now defunct Swiss brokerage MIG.

In a separate announcement today, the Italian financial regulator CONSOB announced that the Belgian FSMA issued a public warning related to the dealings of an unauthorized binary options and forex broker operating under the name Tradersking.

Rounding up the regulatory update, the Financial Conduct Authority has issued a warning against the dealings of another “clone firm”. The entity AugustineFX has been purporting to be an FCA regulated company and has even listed the address and authorization details of the regulated financial planning business Augustine Limited.

The imposting website has been using the information provided by the FCA regulated company to legitimize their broker offering. The company appears to have been targeting mainly Chinese residents, which is another blow to the industry in the region.

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