The US Securities and Exchange Commission (SEC) has announced that Forcerank, a New York-based company, has agreed to pay a $50,000 penalty for illegally offering complex derivatives products to retail investors through mobile phone games that were described as “fantasy sports for stocks”.
The announcement comes just a day after the SEC last made the headlines after fining Artis Hedge Fund over $9 million for insider trading, as reported by Finance Magnates.
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An investigation by the SEC found that Forcerank failed to file a registration statement for a security-based swap offering. The company also failed to sell the contracts through a national securities exchange, both of which are requirements under the Dodd-Frank Act to ensure that information about an offering is fully transparent to retail investors and the transactions are subject to the highest level of Regulation
Regulation
Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority (
Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority (
Read this Term.
Background
According to the SEC, Forcerank ran mobile phone games where players predicted the order in which 10 securities would perform relative to each other.
The Dodd-Frank Act sought to bring security-based Swaps
Swaps
Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps
Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps
Read this Term activity out of the shadows.
Players won points and some received cash prizes based on the accuracy of their predictions. Forcerank kept 10 percent of the entry fees and obtained a data set about market expectations that it hoped to sell to hedge funds and other investors.
Forcerank’s agreements with players were security-based swaps because they provided for a payment that was dependent on an event associated with a potential financial, economic, or commercial consequence and based on the value of individual securities.
Michael Osnato, Chief of the SEC Enforcement Division’s Complex Financial Instruments Unit commented: “The Dodd-Frank Act sought to bring security-based swaps activity out of the shadows, including when it involves retail investors. We will continue to vigilantly scrutinize the market for improper offerings of complex security-based swaps that ignore the required safeguards to protect retail investors.”
Fantasy Stock Trading Warning
The SEC warned the public about fantasy stock trading and other similar websites in a June 2015 investor alert, noting that they potentially violate federal securities laws designed to protect investors from abuses in the swaps market.
The commission continues to evaluate whether new and evolving versions of such games, including paid and unpaid models, are being offered to retail investors in accordance with the federal securities laws, including the requirements of the Dodd-Frank Act.
Forcerank consented to the SEC’s order in violation of the relevant Securities and Securities Exchange Acts. The violations were identified by the SEC shortly after the offering process began, and Forcerank cooperated to quickly shut down the contests before any investor harm occurred, while paying a $50,000 penalty.
The US Securities and Exchange Commission (SEC) has announced that Forcerank, a New York-based company, has agreed to pay a $50,000 penalty for illegally offering complex derivatives products to retail investors through mobile phone games that were described as “fantasy sports for stocks”.
The announcement comes just a day after the SEC last made the headlines after fining Artis Hedge Fund over $9 million for insider trading, as reported by Finance Magnates.
The FM London Summit is almost here. Register today!
An investigation by the SEC found that Forcerank failed to file a registration statement for a security-based swap offering. The company also failed to sell the contracts through a national securities exchange, both of which are requirements under the Dodd-Frank Act to ensure that information about an offering is fully transparent to retail investors and the transactions are subject to the highest level of Regulation
Regulation
Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority (
Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority (
Read this Term.
Background
According to the SEC, Forcerank ran mobile phone games where players predicted the order in which 10 securities would perform relative to each other.
The Dodd-Frank Act sought to bring security-based Swaps
Swaps
Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps
Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps
Read this Term activity out of the shadows.
Players won points and some received cash prizes based on the accuracy of their predictions. Forcerank kept 10 percent of the entry fees and obtained a data set about market expectations that it hoped to sell to hedge funds and other investors.
Forcerank’s agreements with players were security-based swaps because they provided for a payment that was dependent on an event associated with a potential financial, economic, or commercial consequence and based on the value of individual securities.
Michael Osnato, Chief of the SEC Enforcement Division’s Complex Financial Instruments Unit commented: “The Dodd-Frank Act sought to bring security-based swaps activity out of the shadows, including when it involves retail investors. We will continue to vigilantly scrutinize the market for improper offerings of complex security-based swaps that ignore the required safeguards to protect retail investors.”
Fantasy Stock Trading Warning
The SEC warned the public about fantasy stock trading and other similar websites in a June 2015 investor alert, noting that they potentially violate federal securities laws designed to protect investors from abuses in the swaps market.
The commission continues to evaluate whether new and evolving versions of such games, including paid and unpaid models, are being offered to retail investors in accordance with the federal securities laws, including the requirements of the Dodd-Frank Act.
Forcerank consented to the SEC’s order in violation of the relevant Securities and Securities Exchange Acts. The violations were identified by the SEC shortly after the offering process began, and Forcerank cooperated to quickly shut down the contests before any investor harm occurred, while paying a $50,000 penalty.
