Yesterday the AMF, the Paris prosecutor’s office, the French Competition and Consumer Fraud Authority and the French Prudential Supervisory Authority, which is an independent administrative authority operating under the umbrella of the French central bank, have pledged to reign in the “fraudulent practices targeting French consumers of financial services”.
The authorities have jointly come to the conclusion that existing practices in the forex and binary options industries have led to an outbreak of nothing less than financial fraud. The French regulatory authorities are jointly pressing for tighter standards when regulating these products and will be joining the Cyprus Securities and Exchange Commission (CySEC) in devising appropriate standards of conduct.
Tackling Increasingly Dishonest Practices
In addition the regulators will be cooperating in finding ways to limit the access of unregulated entities to the market and prosecute the entities which are engaging in financial fraud.
The delusional promises of easy money have long been a problem for financial regulators, however we are for the first time seeing a coordinated approach from four governmental agencies. France is taking charge against binary options and forex brokers due to the dramatically increased amount of complaints against the practices of a number of both unregulated and regulated brokerages.
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With the unrealistic promises of returns, various websites across the industry are sporting financial trading as a means to quickly and easily gain substantial returns on the initial investment.
€4.5 billion Over 6 Years of Trading
To put the business practices which have become popular in recent years across the industry into perspective, the AMF has highlighted that in 2010 it only received 64 complaints from clients of forex brokers. The amount of complaints against both binary options and forex brokers in 2015 totaled 1656.
The regulator has also pointed out that about 44 per cent of the new advertisements on the web which are related to financial investments are focused on speculative trading.
With the finding that over 4 years 90 per cent of clients recorded €175 million in losses, the prosecutor of Paris estimated the financial damages resulting from illegal forex and binary options scams to have totaled €4.5 billion euros only in France for the past six years.