Regulators And Law Enforcement Swoop In On Fraudulent Brokers
City of London Police with the help of the FCA have swooped in on a number of fraudulent brokers operating within the city limits. The raid was conducted with the assistance of the FCA and Her Majesty’s Revenue & Customs office and targeted 20 firms accused of defrauding UK clientele in 2017. According to the press release losses by British citizens totaled more than £18 million pounds. The purpose of the raid was to “review their compliance documents and gather intelligence on different types of investment fraud.”
The raid is no surprise albeit the largest such action taken against the binary industry to date. The UK FCA has taken on a grudging regulation of binary options allowing CySEC brokers to enter the market although they have no real authority as yet. For now, regulation of the industry is left to the GSC which oversees gambling operations. The FCA is expected to take over regulation early in 2018 as the MiFID II comes into effect although the effect of Brexit on that is yet to be seen.
Many brokers work around the stipulations by registering business addresses at UK and often times London based virtual offices. A virtual office is no more than a room full of email and phone servers routing business traffic on to wherever physical operations for the business may be. It is estimated by authorities that 700+ UK citizens have been defrauded by binary options related scams in 2017. Going back to 2011 and the rise of binary options the estimates increase to over 2,000 victims and £$60 million pounds with the caveat that many cases have likely not been reported. There is no word on what the authorities actually uncovered during the raid.
CySEC Regulation Works, Kind Of
Despite much criticism the CySEC style of regulation is working to some extent. The regulator has issued licenses, held brokers to some amount of accountability and even enforced punitive actions up to and including suspension and revocation of licenses. Two of the more recent suspensions have been lifted. Both Gametech, operator of Prooptions.com, and Optionrally have had their CIF licenses restored after moves to comply with regulatory issues.
Gametech was suspended for issues with capitalization and funds, specifically the Capital Adequacy Ratio. It was not allowed to operate during its suspension period and pulled the website down, so far there is no word if they’re coming back to business or maybe will take on a new brand. Optionrally was also targeted for non-compliance relating to funds and capital requirements. After a series of fines and finally suspension the firm was able to come back into compliance and regain the trust of regulators. The broker remained live but unoperational throughout the period and is live today, it has not however regained our trust just yet. You can follow this link to find our list of top rated and trusted brokers for your region.