Do not invest more money than you can afford to lose.
The Manitoba Securities Commission (MSC), the financial regulatory body of the Canadian province of Manitoba, issued a warning last week against binary options broker Magnum Options after an elderly woman lost $10,200 by trading with them. The entity has no authorization to provide binary trading within Manitoba, or any other provide in Canada.
The company operates as MagnumOptions.com, magnumoptions.eu, and Hampshire Capital Ventures.
The investor, a 61-year-old Canadian woman, became aware of the fraudulent binary options broker after loosing $2,000 and being denied access to another $8,000 deposited with it. She was required to complete two additional trades before being able to withdraw any money. According to the woman, Magnum Options told her what trades to do. Once she followed their instructions, the woman found her account empty.
The investor said, citing what the brokerage had told her, the reason for this was a bonus for which, however, she did not recall signing up.
On its website, Magnum Options says it is based in the UK, but it mentions nothing about licensing or authorization. The broker offers trading in several types of binary options, both short-term and long-term, on currencies, commodities, stocks, and indices.
The broker is not registered to sell securities in Manitoba or any other province in Canada. Under the regulatory framework of Manitoba, binary options are regulated as securities under the securities laws. In Canada, capital markets fall under the regulation of provincial watchdogs and legislation rules may vary in from province to province.
According to the MSC, this year Manitobans have reportedly lost nearly $185,000 to unregistered, offshore binary options firms, trading under a variety of names. However, the regulator estimates the amount to be higher than the reported due to unreported cases.
“These unregistered firms are slick, professional, and often very friendly. They make investing look easy, but the real goal is simply to part you from your money,” said Jason Roy, senior investigator with MSC, adding that it is unlikely the money would be recovered. “Most of these companies are operating offshore, using bogus credentials. It’s an international shell game for the Internet age,“ he said.
Last month, another Canadian provincial regulator, the British Columbia Securities Commission (BCSC), issued a warning against Magnum Options for providing binary options trading services to local citizens without being authorized. In March, the Canadian Securities Administrators (CSA), an umbrella organization of Canada’s provincial and territorial securities regulators, warned that there is not a single binary options broker or platform authorized or licensed to operate on the country’s territory.
Although binary options trading services are not illegal in Canada, in some countries it is allowed, while in others, such as neighboring USA, this type of trading is restricted to exchange-traded only and there are two binary option exchanges – the Nadex and Cantor Exchanges.
In binary options trading, investors guess whether the price of a certain instrument 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.
We strongly advise you to only deal with regulated forex brokers, authorized by reputable regulatory bodies like CySec, FCA, and CFTC/NFA, among others.
Source: MSC
