US SEC fines binary options broker EZTD $1.7 mln for misleading investors

US SEC fines binary options broker EZTD $1.7 mln for misleading investors

Do not invest more money than you can afford to lose.

 

The US Securities and Exchange Commission (SEC) said on Thursday it has charged Israel-based binary options and forex broker EZTD Inc. with misleading investors and has ordered it to pay more than $1.7 million. The broker has lured investors into trading binary options over the Internet without disclosing them the associated risks.

EZTD has agreed to forfeit approximately $1.5 million in revenues obtained from US customers and to pay a $200,000 penalty. The broker neither admitted, nor denied the charges, the regulator stated.

It has failed to disclosed on its trading platforms that there was significantly greater potential for investors to lose rather than earn money. Instead, it asserted investors binary options are a “highly profitable trading platform” and “an extremely lucrative avenue for individuals who are looking to see an increase in income”. Statistically, less than 3% of the approximately 4,000 US investors who opened accounts with EZTD actually made any profit on their investment, according to the SEC.

“EZTD’s revenues were largely derived from customer trading losses, yet EZTD emphasized the profitability of trading in binary options,” said Stephanie Avakian, deputy director of the SEC’s division of enforcement. “Companies dealing in binary options must disclose more than general statements about investment risk so investors in these instruments understand that the odds are stacked against them,” she added.

In addition, EZTD has failed to register with the relevant authorities in the US. No financial service providers are allowed to operate in the country without an authorization. The SEC noted that the broker no longer sells binary options in the US.

EZTD, formerly EZ Trader, operates through several wholly-owned subsidiaries – Israel-based Win Global Markets Inc. (Israel) Ltd., Cyprus-registered WGM Services Ltd., Japan-based EZ Invest Securities Ltd., Belize-incorporated SCGP Investments Ltd., Australia-based EZTD Australia PTY Ltd., and Vanuatu-registered EZ Trader Ltd. Group companies hold licenses in Cyprus and Japan.

The SEC is in charge of the securities markets regulation in the US. It said that it continues to receive numerous investors complaints concerning binary options service providers. In most instances, traders have trouble withdrawing their investments or are asked to put in more money to win back what they had lost.

Recently, the SEC announced it obtained judgments and orders totaling more than $4 billion in disgorgement and penalties for the fiscal year (FY), ended 30 September, 2016.

When engaging with unauthorized and non-regulated brokers traders are putting their investments at higher risk. We strongly advise you to only deal with regulated forex brokers, authorized by reputable regulatory bodies like CySec, FCA, and CFTC/NFA, among others.


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