Developing markets are new growth areas for financial services providers however due to immature regulatory proceedings investors are being caught out by local brokers who are misusing the holy name of FX.
Police have asked the public to watch out for a new scam in online forex trading that targets the middle class after they received unprecedented number of victims.
At least 1,000 unsuspecting investors have been conned of funds to the tune of $13m (Shs32.3b) by online forex traders, police authorities confirmed yesterday.
The Uganda Shilling is currently trading at 2507 against the greenback.
Two companies Reilag Investments and FX Salongo (U) are currently under investigation. Detectives are holding the chief executive officer of FX Salongo (U) to help with investigations in relation to the scam that mainly targets city dwellers.
The Participants in Forex Trading and their Role in the MarketGo to article >>
Police said the Reilag Investments chief executive is on the run. Daily Monitor cannot name the suspects because no formal charges have been preferred against them. Kampala Metropolitan Police spokesman Ibin Ssenkumbi said more victims are reporting similar cases against the CEO of FX Salongo.
At least 700 people were allegedly conned by Reilag while 300 are demanding their funds from FX Salongo. Some of the affected people who reported cases in February, however, are wary that police freed the prime suspect without charges.
One of the victims said the prime suspect has received military protection since he was set free. But Mr Ssenkumbi said some of the cases are civil and police cannot handle them.
According to correspondences between Reilag investors, the suspect collected Shs43.5m from each of the 700 investors alleging that he was going to invest it.
Forexmagnates team have written a detailed reprot on FX in Africa, available in the next quarterly report.