Battling Another Pandemic – Financial Commission Continues to Fight Scams on Financial Markets

The Financial Commission / Commission News / Battling Another Pandemic – Financial Commission Continues to Fight Scams on Financial Markets

April 7th, 2020, The Financial Commission today announces its continued efforts to protect traders during the current period of high volatility on global financial markets amid the Covid-19 pandemic. In responding to an exponentially higher amount of trader inquiries and complaints, including from customers of non-member brokers, the Financial Commission has identified new unfair and dishonest sales practices used by some brokers, which present a significant risk to the trading community.

Guarantees and Insurance 

Experts of the Financial Commission have noticed a large number of new inquiries from the public regarding guarantees and so called “deposit insurance”, which are provided to prospective clients by the sales staff of dishonest brokers. Such situations often also involve fake insurance policy documents with specific dates of coverage and deposit amounts, which are covered by such “policies”.

Firstly, such practices provide misleading information regarding the risks of trading financial markets to the public. Secondly, most of the time, such dishonest brokers will “guarantee” a return of the customer’s losses only if their deposited funds are managed or traded solely by an authorized trader or representative working at the brokerage. In other words, the trader must provide authorization for their funds to be managed by the brokerage, but is not restricted from self-trading on their account. As such, malicious representatives can provoke a trader to close a losing trading position or order and in turn violate some of the provisions of the so-called “insurance policy” provided to the trader. As a result, traders often will lose their entire account balance and be left without such “insurance protections”. In many developed countries around the world, such practices are considered fraud by industry regulators.

Stay Informed 

The Financial Commission continues to fight such fraudulent practices by notifying the trading public and providing credible information.

We once again remind everyone who is considering trading on financial markets, that any type of financial markets trading using leverage is highly risky and you risk to lose all of your deposit funds. Furthermore, we recommend that you fully study and understand all the risks involved prior to beginning trading. 

“Insurance policies” or other “guarantees” are used as part of aggressive sales tactics by dishonest brokers and simply do not present any protections to your deposit funds and cannot be used to limit trading or investment risks. 

If you have been offered such “guarantees” or “insurance” or other benefits, which have raised some doubts, we recommend that you reach out to us to get an opinion from our experts and a review of the sales offer by email: [email protected].

About the Financial Commission

Founded in 2013, the Financial Commission is a leading independent member-driven external dispute resolution (EDR) organization for international online brokerages, exchanges and Blockchain firms that participate in global foreign exchange (forex), derivatives, CFD and digital asset markets.

The Financial Commission provides efficient compliance solutions to its members, alongside its External Dispute Resolution (EDR) mechanism that serves as an effective channel for processing complaints from clients of member firms.

For more information please contact us at [email protected].

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