Whether you are new to trading or an experienced trader, it’s important to know how to spot fraudulent commodity brokers. While there are many factors that can lead to a broker being fraudulent, there are some common signs to look for.
Common signs of a fraudulent online brokerage firm
Amongst the financial community, you may have come across a few unscrupulous neophytes robbing you of your hard earned cash. The best way to ward off the savviest of the lot is to perform a bit of due diligence on the folks that are manning the tills. It may seem like a daunting task, but with a bit of foresight, you can avoid the pitfalls of the past. A reputable broker should be able to get the job done with a minimum of fuss and tear. The best place to start is with a simple online broker search. If you are in the market for a new brokerage, there is no reason to take the first offer you see. The best part is, there are plenty of brokers out there willing to make the jump.
Non-regulation by the CFTC or NFA
CFTC and state securities regulators are pursuing a second nationwide fraud action against traders, firms and individuals. The CFTC seeks permanent bans on registration and trading, monetary sanctions and restitution for ill-gotten gains.
The CFTC’s Division of Enforcement is investigating alleged violations of the Commodity Exchange Act and CFTC Regulations. The Division of Enforcement has been working to identify and prosecute fraud, as well as abusive trade practices, in the derivatives markets. The Division of Enforcement has a team of staff members including Kyong J. Koh, Lauren Bennett, and Paul G. Hayeck.
NFA has always considered trading ahead of customer orders to be a violation of Compliance Rule 2-4. Most futures exchanges prohibit trading ahead of customer orders. The NFA Business Conduct Committee has adopted a new interpretive notice. This new interpretive notice explicitly prohibits unfair trade practices.