Shmuel Hauser, the Chairman of the Israel Securities Authority, has asked Israel’s Attorney General to amend the law to make it illegal for all firms to market or produce binary options products from Israel. The end may well be nigh, and the real FX and electronic trading industry with bona fide business across the world can breathe a sigh of relief.
“The destroyers and layers of waste that go forth from among you (Isaiah 49:17).”
At last, the end of the road is getting nearer for the already moribund binary options business.
In Israel, home to the vast majority of fraudulent binary options companies which have stolen hundreds of millions from people all over the world during the last five years, the government is now beginning to step up its mettle having a few months ago vowed to put a stop to binary options globally and quash the entire nefarious business.
Israel is home to not only the majority of the owners and holdings companies that control the binary options brands that operate from various jurisdictions globally, but also the major so-called platform providers and technology firms, which are really just spin-offs from the very lowbrow online gambling and lead buying or affiliate digital marketing scams that have been operating in Israel for many years, and are in reality simply market makers that provide the you-against-the-house weighted environment in which customers are led to believe – quite wrongly – that they are trading a financial instrument when there is no financial markets element whatsoever.
The Chairman of the Israel Securities Authority (ISA) Professor Shmuel Hauser has made it one of his top priorities to be able to implement a law and expedite such a law that would prevent the entire binary options business from operating anywhere in the world.
In France, Belgium, Israel, the United States, Germany, Holland, China and Denmark, binary options are classified as illegal due to their fraudulent and deceitful nature, thus no firm is allowed to operate on their territories, although it is very clear that these firms continue to flout such rules and are still duping American customers, several years after the ban, as detailed by extensive FinanceFeeds research and despite Banc de Binary, one of the world’s largest binary options brands, having been fined $11 million for doing just that.
It is simply a case of the mentality of the operators in that if they are prepared to steal from unsuspecting members of the public by offering a weighted gambling platform disguised as a financial product with no remorse, then they are likely not to have any regard for any national laws, especially where they do not reside.
Professor Hauser has managed to get binary options banned in the domestic Israeli market, but his concern is that almost all of the firms and their suppliers are based in Israel, operating as a merry gang of criminals, fleecing people overseas, thus the Israeli legal system has no jurisdiction over a company whose owners may be in Israel but is registered in an offshore jurisdiction and targets people all over the world. This is what he wants to change – and it is now looking very likely that he will succeed.
As last week drew to a close, Professor Hauser requested permission from Israel’s Attorney General Amichai Mandelblit to amend the law so that it can prohibit the marketing of binary options from anywhere in Israel to anywhere in the world, including from any commercial structure (many of these slippery characters disguise their operations as marketing or service firms that support their real firm abroad).
This was broadcast nationally on Israeli television, and was featured on Wednesday last week’s Laila Calcali (Hebrew for Economic Night) show on Channel Ten.
“Israel’s fraudulent binary options industry is an ugly phenomenon that harms innocent people and unfortunately fans the flames of negative perceptions of Israelis and Jews. We must do everything possible to eradicate this phenomenon” – Professor Shmuel Hauser, Chairman, Israel Securities Authority
Think you can run away to a different country? No chance!
Ah, I hear you say. But what if these binary options firms get wind of such an imminent law, and decide to run away to Panama or the Cayman Islands, and then carry on from there?
The interesting thing here is that – before any of these urchins and scalliwags decide that it is a good idea to up sticks and move away from Israel, it is worth considering that there is a very commonly used and very effective law in Israel called צו עיכוב יציאה מהארץ (transliteration from Hebrew: Tzav Ichuv Yitziah Mi HaAretz) which is a central point of not only Israeli criminal law, but also civil law. This means that if this practice is outlawed and any criminal trials take place, NONE of the owners of any of these firms, or their directors, will be allowed to leave the country at all, thus they will be made to face the music. If a civil or regulatory lawsuit is brought against them, they also will not be allowed to leave the country.
Considering the government’s disdain for these firms and the pressure from regulators and governments around the world that have banned it and cited several million having been taken from customers, this is exactly what would be invoked. To give an idea of how often used and how strict this law is, if you are Israeli, and you do not pay a bill such as council tax or healthcare, you would not be allowed to leave the country until the debt was settled. If you scam someone for a small amount, and that person complains to a court, you cannot leave the country until it is resolved, and this also usually includes leins on bank accounts and seizure of assets which is done by a central computer very quickly.
Professor Hauser has previously referred to the binary options business as ‘disgusting’ and stated that he has a personal responsibility to quash the entire business, and in the aftermath of several bans from many firms across the world plus massive global media coverage in mainstream newspapers including British newspaper The Times having labeled it a complete fraud, an unofficial industry body has now been formed by several owners of brands and platform provider/market makers to attempt to deflect the imminent jaws of the crusher.
Professor Hauser, in his address to the audience on Wednesday last week’s TV report on Channel Ten, resorted to quoting talmudic prophecies by quoting the paragraph that starts this article “The destroyers and layers of waste that go forth from among you (Isaiah 49:17).”
In modern Hebrew, that phrase is used to refer to ‘enemies within’ who bring ruin upon the society that raised them.
Indeed, Professor Hauser takes this matter just as literally and as personally, believing that his parents were founding fathers of the State of Israel and he cannot bear watching the country that his family built have its fine reputation ruined by ne’erdowells who could not care less. (There are many others who echo his line of thinking – Ed).
This will never work.
The recently founded European Brokers Association (EUBOA) it is not a recognized trade association, and most certainly, it is very unlikely that any national regulatory authority in any major region that is synonymous with the genuine financial markets business would entertain the establishment of such a thing.
So far, the EUBOA has had two meetings in Cyprus, however when looking at the most successful firms in the business, some of whom are representing the new EUBOA, even more concern should arise. 24Option, one of the largest brands that uses TechFinancials’ platform, was raided by Israeli police three years ago, one of its shareholders having been removed from the office and arrested. Just days later, the firm upped sticks and move to Ireland.
Other major firms in the sector include Banc de Binary, which was subject to an $11 million fine from the CFTC for illegally soliciting US customers despite having been in receipt of a cease and desist order prior to the charges issued against the firm in 2013.
Anyoption, one of the largest brands, is owned and operated by Shay Ben-Asulin, who was charged by the Securities and Exchange Commission in America in 2011 for participating in pump-and-dump schemes and for engaging in a fraudulent scheme to conceal the sales of millions of shares of their companies, netting him and his 7 accomplices $33 million, yet he went on to found a large binary options brand after this, continuing to satisfy his thirst for ripping people off.
Hardly the most salubrious set of people.
Within the companies, themselves, the morals are not really much better.
The interesting thing is that to fully understand how rotten to the absolute core the binary options business really is, a brief look behind the scenes will reveal that not only do firms willfully steal money from people who think (quite wrongly) that they are investing in a financial product, but they all steal from each other too.
FinanceFeeds has conducted an investigation which delved into the depths of the marketing protocols of many binary options firms, deducing that far from legitimately purchasing leads, or investigating where a client may be relevant for a specific product (if there can be such a thing with OTC binary options!) the practice of stealing leads from other brands and recycling them is rife.
It is widely recognized that many binary options brands have also interests in poker and gaming sites, and then when the gambler has lost enough money, the brands transfer the lead to their binary options desk and try to convince the gambler that he should not gamble, but instead trade the financial markets, which is a blatant and outright attempt to mislead. The likelihood of the client being offered a live trading market is as likely as the binary options salesman’s real name is John Smith from London.
In fact, geographical knowledge appears to be something of a challenge for many of these representatives, which is interesting considering that they profess to be in an international business. One particular binary options brand was recently encouraging its sales team – all of whom had fake names – to explain that they were calling from Dublin, Ireland, UK. Unless I have missed some very important geopolitical news, Ireland has never been in the United Kingdom. We must have all been wrong about the difficulties associated with the reign of William of Orange dating back to 1672.
Lying to customers about the actual product, disguising a gaming platform which is weighted in favor of the house as a financial markets system, about the names and location of the firm and other important matters is one thing, but stealing leads from each other demonstrates the lack of moral standards which run deep.
Recently, many lead buying advertisements have proliferated LinkedIn, which is intended to be a business networking site, not a place to peddle recycled customer data for which the vendor has no intellectual property rights.
My experience of explaining the rules of intellectual property to many binary brand owners has resembled attempting to explain the function of a U-235 pressurized water reactor to a halibut. The answer, and I quote verbatim, from one particular large binary options brand that also has a lead buying and gaming business was “We target people who are addicted to gambling. We look to get leads from all sources and funnels, and if people working here can bring leads then this is better.”
What this particular binary options brand owner was alluding to was that they like to employ people who have worked at another binary firm, who before leaving, have copied the database onto a memory stick in order to bring it to another firm.
If the internal procedures do not respect the intellectual property of other businesses, legitimate or not, then there is little hope for any morality toward product or customers.
Another nasty trap is the plethora of entities now selling leads on the internet, with very garish marketing campaigns aimed at attracting the attention of hungry binary options brand owners.
Affiliate marketers – likely ex-binary options sales staff – selling stolen leads
As part of detailed research into this matter, FinanceFeeds approached three of these entities, however we believe that they are all connected and that it is a band of former binary options salespeople who have stolen leads and are now offering them on the open market. “Ping Me For Leads” stated the front page slogan on the messenger used by one particular entity. Hmm, how inviting. I might just do that….
Our conversation began with one particular sales person stating “Let me explain how we qualify leads. We have a call center in house, where we qualify leads, and for each lead you get fully verified details, (no wrong numbers, duplicates etc.), they will be all in a position to invest, they expect to get a call and to be made an offer to trade from your sales team, and all leads are qualified in an individual campaign for each client and are branded (we introduce your brand, promotions etc.)”
(Editor’s note. I had to straighten the English out here. Normally, the addition of the abbreviation sic. would be enough, but to comprehend what was an incoherent written sales pitch, I needed to adjust the English significantly. John Smith, my foot.)
The salesman was then asked by FinanceFeeds how the leads are acquired. “We get them from our funnels – financially related seminars, webinars, e-books etc”. I would love to know what the “etc” is. Sounds fascinating. Perhaps it is an acronym for ‘entirely, totally corrupt’.
When asked how lead sales people safeguard the leads that they are selling to ensure that they are not stolen, the salesperson backtracked, admitting “We target all of the regions that are popular, however these leads are not fresh and this is the main issue.”
We asked if they had been used by other binary options brands, to which the answer was “Yes exactly.” Make of that what you will.
The price we were offered was 22 euros per lead, and were asked how many we would like to start with.
The company maintained that “Every lead that you receive will speak to our call operators, who will introduce your brand, promotions, offer etc (more etc, interesting) and we will explain the next step which is a sales call from your sales team. Only if they agree this is counted as a lead and we set up a time-slot for the phone call.”
This practice has become so widespread that the platform providers are aware of it. One particular executive within a platform firm once explained that automation is perhaps a means of removing the high pressure sales from the binary options business, a question that FinanceFeeds posed to CySec Chairman Demetra Kalogerou in the summer of this year, her having concurred with this line of thinking.
However, this particular platform developer explained that it is not only the high pressure sales that could be rooted out by automating platforms and removing staff from offices, but the theft of leads by employees in binary options brand call centers and resale of such leads to other brands using the same platforms and selling the same ‘product’.
Binary options is a blight on the landscape – mainstream FX and electronic trading firms would be better off without it.
At a recent meeting in London with several senior executives in the FX industry, FinanceFeeds understood that many of those in senior positions in the institutional and top level retail FX business would like to see the end of binary options too. It is creating too much of a whiff of bad image, and doing irreparable damage to the retail market by posing as something that it is not.
FinanceFeeds remains committed to the support of the mainstream and high quality bona fide retail and institutional firms in bona fide jursidictions which operate a genuine electronic trading system, as well as the support of their technology partners.
Our continued research alongside these firms aims to engender and facilitate the very top level of quality possible in today’s highly sophisticated electronic trading environment, and in order to do so, stands vehemently against the lowbrow and back street nature of binary options brands, thus we consider our efforts in this matter to have made a very positive difference to protect the high quality firms in this industry, and future customers.
Featured image: The “Knesset”(Israeli parliament), Jerusalem, Israel
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