Foreign exchange fraud is any trading scheme used to defraud traders by convincing them that they can expect to gain a high profit by trading in the foreign exchange market. Currency trading became a common form of fraud in early 2008, according to Michael Dunn of the U. The foreign exchange market is at best a zero-sum game, meaning that whatever one trader gains, another loses. In August 2008, the CFTC set up gem2008 forex trading special task force to deal with growing foreign exchange fraud.
In 2012, Christopher Ehrman, an SEC veteran, was selected to run the new SEC Office of the Whistleblower. United States, has noted an increase in the amount of unscrupulous activity in the non-bank foreign exchange industry. Between 2001 and 2006 the U. An inexperienced retail trader will have a significant information disadvantage compared to these traders.
Retail traders are, almost by definition, undercapitalized. Although it is possible for a few experts to successfully arbitrage the market for an unusually large return, this does not mean that a larger number could earn the same returns even given the same tools, techniques and data sources. By offering high leverage some market makers encourage traders to trade extremely large positions. This increases the trading volume cleared by the market maker and increases their profit, but increases the risk that the trader will receive a margin call.
CIF authorisation as well as listed the current and past CySEC authorised companies. Regulatory Holes Provide A Playground For Forex Fraudsters”. Archived from the original on 2014-02-03. CFTC establishes task force on currency fraud”. The Federal Register Archived 2010-08-28 at the Wayback Machine. A: Christopher Ehrman, Director, CFTC’s Whistleblower Office”.
CFTC complaint Archived 2006-03-01 at the Wayback Machine. Fraud charges against multiple forex Firms Archived 2006-04-21 at the Wayback Machine. Forex Fraud Investor Alert Archived 2008-10-29 at the Wayback Machine. Foreign Currency Fraud Action Archived 2006-06-14 at the Wayback Machine.