France’s ACPR notes numerous cases of binary options, Forex fraud
Although the overall number of complaints received by the regulator fell in 2016, the cases of online trading fraud were numerous, according to ACPR’s report for last year.
France has been among the most active jurisdictions in terms of trying to curtail illicit activities of fraudulent binary options and Forex brokers. The efforts have led to a ban on digital advertising of high-risk products, including binary options and CFDs with high leverage, as implemented in the Sapin 2 law. The financial markets regulator AMF is also co-operating with other European regulators in order to halt the fraudulent operations of online trading companies scamming French investors.
Nevertheless, the number of fraudulent entities targeting French investors remains high. According to the Annual Report for 2016 issued by France’s Prudential Supervision and Resolution Authority (ACPR), complaints about such entities were numerous last year.
The regulator received 6,577 complaints in 2016, with the number down 11% from 2015. However, let’s note that the number of complaints received in 2015 was 31% up year on year. This means that there are grounds for concerns. After checking the complaints, ACPR demanded explanations from 10% of the companies.
A substantial amount of the complaints involved Forex and binary options fraud, the regulator notes.
These findings are in tune with those from the Annual Report for 2016 of AMF’s Ombudsman Office. In 2016, the AMF Ombudsman Office received 116 complaints against Forex and/or binary options firms regulated in an EU jurisdiction. This is down from 139 complaints in 2015, but the nature of the complaints is worrisome. The majority of complaints – 83%, concerned companies regulated in Cyprus. A number of complaints alleged psychological manipulation, harassment and draining of investor accounts – all of them were against CySEC-regulated firms.
In the report, the Ombudsman highlighted the strong effect of advertising of high-risk financial products by football clubs and the horrible effects of aggressive phone calls. This effects were underlined in a study by scientists at the University of Aix-Marseille showing how online trading firms’ sales teams use tactics like “foot in the door” to manipulate clients.
ACPR reviewed 3,933 advertisements of financial products in 2016. This number highlights the need to handle misleading advertising of high-risk financial products. Companies that have sports sponsorships resulting in the advertising of such products and who had such partnerships running through July 1, 2016, have until June 30, 2017 to terminate them. Otherwise they face penalties under the Sapin 2 law.
