The US Commodity Futures Trading Commission (CFTC) has charged binary options broker Vision Financial Partners and its founder Neil Pecker for unlawfully obtaining about $3 million from their clients, the CFTC said in a notice on Wednesday. The regulator filed on 16 February, 2016, an enforcement complaint against the fraudulent company and its principal with the Florida District Court.
In addition, Pecker and his company have provided off-exchange binary options trading and acted as commodity trading advisories without having the required registration with the CFTC. As a result of the CFTC’s complaint, the Florida District Court has ordered the freezing of the assets of the broker and its founder. The Court has also prohibited the defendands from destroying books and records with relevant to the case information.
The CFTC named another four entities – Prometheus Enterprises, Westward International, Coucarin Holdings, and GDCM Trust as relief defendants in the case, which means they may have benefited from the illegally obtained funds, but no charges were pressed against them. The regulator said in the notice these companies have allegedly received client funds without providing any legitimate services to clients and without any interest or entitlement to their funds.
In its complaint, the CFTC noted that Vision Financial Partners and Pecker, who is the only person employed with the company, have fraudulently acquired since October 2012 about $ 3 million by solicited more than 120 clients in the US and Canada. Moreover, nearly $2 million of the funds were misappropriated and used for personal needs and even diverted to bank accounts of the relief defendants.
The defendants have engaged clients in off-exchange binary options trading, while providing misleading information or no information at all regarding the fact that client accounts are with off-shore entities and traders are unable to withdraw their funds unless they have executed a certain amount of trades.
The CFTC noted investors should be cautious and check on brokers with which they choose to engage as in case of wrongdoing traders may not be able to recover their funds.
In the recent year, scams have increased significantly in number. To help traders protect themselves from malicious brokers, the CFTC has issued on its website a set of advisories with warning signs that can help citizens identify fraudulent entities. In addition, it keeps a register with fraudulent binary options brokers and trading platforms.
Earlier this month, forex broker and software provider 4X Solutions and its principal Whileon Chay received an order from a US court to pay a combined $11 million in disgorgement and penalties in relation to a forex Ponzi scheme which they run. This happened after the CFTC filed an enforcement action against the fraudsters.
In binary options trading, investors guess whether the price of a certain instrument, in this case currencies, would go upwards or downwards within a pre-determined time frame. Once the time is up, the option is deemed expired and the bet is settled. Depending on the outcome, a trader either collects a profit, or loses money.
This type of trading has been vastly gaining popularity both among traders and brokers due to its simple nature and fast and easy execution, and the fact that it does not require deep knowledge.
We strongly advice you to be cautious regarding your investments and to only choose brokers and investment companies that are regulated by reputable financial watchdogs, such as the CFTC, CySEC, FINMA, FCA, etc.