Canada’s AMF Charges Pank Trading and M5 Forex Method in $1.2M Fraud

Prosecutors describe a scheme in which investors were lured into handing their money in exchange for promises of huge returns

Quebec’s Autorité des marchés financiers (AMF) has filed charges against Two forex brands and their owner who raised over $1 million through soliciting investors from Canada and elsewhere. The Canadian provincial regulator says Patrick Kerkhoven, Pank Trading Capital Inc., and M5 Forex Method Inc. illegally profited from defrauding customers through unregulated forex trading products.

Prosecutors describe a scheme in which investors were lured into handing over thousands of dollars in exchange for promises of huge returns in FX investments. They bilked more than 50 retail clients alongside a few accredited investors out of more than $1.2 million, the AMF said.

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Following a hearing, the Financial Markets Administrative Tribunal also instructed the forex companies and the people behind it to close all websites associated with the scheme. Specifically, Quebec’s financial markets administrative tribunal ordered Patrick Kerkhoven and his associated firms to cease from carrying on business as an adviser and dealer or engaging in securities transactions.

With little hope of ever seeing his money again, the provincial watchdog said the scam started in 2017 when company representatives called the victims and promised high returns if they invested with the firm.

Some investors were promised returns of 10 to 20 percent a month (120% to 240% per year) on their deposits, but when they began asking where their money was, they only heard excuses or found themselves unable to reach the defendants.

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The ongoing investment by the AMF saw the matter differently and announced they had obtained orders to freeze the defendants’ assets, including their bank accounts.

The statement further reads, elaborating on the assets forfeiture:

“The orders sought are also intended to order respondent Patrick Kerkhoven not to divest any funds, securities or other assets in his possession or placed with third parties and to order the respondent banks not to divest any funds, securities or other assets deposited with them on behalf of respondent Patrick Kerkhoven. These freeze orders do, however, contain a provision allowing respondent Patrick Kerkhoven to continue to make the monthly payments he must make under the Consumer Proposal filed with trustee Ginsberg, Gingras et associés inc. under file number 41-2362670, provided that the money used to make those monthly payments is not obtained in violation of the Derivatives Act or the Securities Act.”

The chief regulatory body in Canada has recently proposed a regulatory framework that provides clarity for derivatives activities. Among other things, all highly leveraged products offered to retail clients must be approved in advance by IIROC. Brokers must obtain prior approval for their leveraged products either when releasing new instruments or introducing any changes to the current offerings.

CFD sellers would also have their rights restricted with regard to the level of promotion of CFD contracts in order to eliminate existing regulatory arbitrage situations. Further, an additional risk warning would be required, clearly indicating the level of risk to which CFD buyers would be exposed. The risk disclosure statement provided must be approved by IIROC.

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