Forex firm employee leaves Russian client without his home
It took less than 5 months for an FX firm to take away all of the savings of a newbie trader from Russia’s city of Orenburg. But that was not enough.
Companies with (the least to say) suspicious reputation continue to plague the online trading industry and to go to extremes when it comes to luring money from investors. Earlier this year, FinanceFeeds reported of the tragic events stemming from the aggressive sales practices of binary options platform 23traders. The latest example of such aggressive methods that have cost more than the savings of an investor comes from Russia.
On April 7, 2017, the Central Regional Court of Orenburg published its decision on the case of an Orenburg resident, who, due to his complicated financial situation, was forced to sell his apartment for a minimal sum.
In July 2016, the plaintiff got a message from consultancy center “Adam Hall” on his phone, offering him to install a special program, simulating trading operations with currencies and stocks. The man agreed and the program was installed by the firm, which claims to provide advice that boosts traders’ profits, on his notebook and phone.
Shortly after the demo experience, the man was persuaded to deposit real money and start trading live. By November 2016, he had already invested all of his personal savings, plus money borrowed from friends and banks.
At that point, the sales instinct of “Adam Hall” employees obviously got stronger. One of them offered to the man to get “a loan from a fellow”, with the role of a collateral to be served by the investor’s apartment. On November 18, 2016, the newbie trader signed a deal to sell his home for RUB 600,000 (USD 10,500).
In December 2016, the court ruled that the investor was a victim of a fraud. He turned to court again seeking that the deal to sell his property was determined illegal. However, as he had signed a note saying he was fully aware of what he was doing when he sold the apartment, the court turned his application down. The deal was found legitimate.
The story undermines the reputation of the FX industry in Russia further. In the face of the new Forex law signed by Russia’s president Vladimir Putin in December 2014, the Forex sector is far from being regulated. Only eight companies have so far secured Forex dealer licenses from the Central Bank of Russia, whereas most firms that target Russian customers are based overseas and are hard (even impossible) to oversee and prosecute in case of fraudulent activities. The Bank of Russia has voiced its plans to introduce requirements for the Russian websites of foreign FX firms – how such regulations will be implemented remains unclear.