We’ve all seen the flashy flickering forex websites promising excellent returns, hundreds or even thousands of percents a year and most of us told ourselves that there is no way that someone is buying that. But in fact there are such people and they are more than you can imagine. Many people see these sites or popping banners of this or that forex trading robot and just click and buy the software or invest in some unknown forex fund, and it’s probably the last they’ll see their money. It’s about time someone put a stop to it.
While most large regulated and non-regulated but respectable brokers monitor their own advertisements, lots of scammy little brokers and private scammers know that the only way they can profit is by promising huge profits to naive people. In fact the phenomena is so wide spread that the FBI has reported that the number of new HYIP (High Yield Investment Programs) investigations during fiscal year 2009 increased more than 100% over fiscal year 2008. And it’s just a drop in the sea.
Last year NFA has issued a proposal for forex brokers to monitor their own content and websites, so far so good however forex brokers themselves account only for a fraction of the forex portals.
The US Financial Inustry Regulatory Authority (Finra) has lately warned investors to be on their guard against social media-linked ponzi schemes, in which scam artists use YouTube, Twitter and facebook to promote high-yield investment programmes (Hyips) with the promise of unrealistically high returns.
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The agency points to the recently exposed Pathway to Prosperity scheme, which allegedly defrauded over 40,000 investors in over 120 countries of $70 million and used online forums and blogs to brag about the returns available. Earlier this month, the Securities and Exchange Commission obtained an emergency asset freeze against a Canadian couple who fraudulently touted penny stocks through their website, facebook and Twitter.
Finra SVP John Gannon says: “Hyips are old-fashioned ponzi schemes dressed up for a Web 2.0 world. Some of these schemes encourage people to bring in new victims, while others entice investors to ‘ride the ponzi’ by attempting to get in and get out before the scheme collapses.”
And I’m saying that this is the time for a whole new level of forex portals, blogs and forums self-regulation. A forex portals Self Regulatory Organization (SRO) much similar to the NFA (but wiser) should be formed and should also be embraced by all legitimate forex brokers who will only advertise on domains which are subject to this self-regulation. This is a dual regulation in this case.
Let’s pick up the glove Francesc.