One of the most common signs of fraudulent commodity brokers is the advertisements that falsely claim that they can double or triple a customer’s profits overnight. These ads often show unrealistic results, including trading with large margin calls. These brokers may use misleading advertising tactics like exaggerating their trading results, or making up their own results. To be on the safe side, read reviews and look for the CFTC seal of approval.
Investors should carefully examine the length of time a brokerage firm has been in business, and ensure that the firm is registered with a legitimate international financial regulator. The website of a reputable broker should list the agencies that regulate them. For example, eToro’s website lists the three major regulatory agencies that regulate the company. Beware of fraudulent firms that claim to be regulated by bogus agencies. These agencies are not independent and have no authority to sanction or fine violators.
SEC’s investigation of the Spot Option’s operations is part of a larger crackdown on fraudulent brokerages. The SEC has filed a complaint against the company and its former president and CEO, Malhaz Pinhas Patarkazishvili. In addition, the SEC has charged several individuals and entities with being involved with binary options. This is not a complete list of the SEC’s findings, but it should provide potential investors with a clearer idea of what to expect if they choose to invest.