Why is there a loophole that allows ‘education’ conmen to litter the retail FX space? – Op Ed

If top quality firms in top quality jurisdictions are being subjected to regulatory pressure and increasing restriction, why are conmen selling false educational software and bogus trading courses allowed to continue to circumvent regulation?

An aspect that is particularly important to online businesses is the reputation of an entire industry relies substantially on good reviews, the indexing by Google of top quality companies that provide bona fide services, and that the regulatory authorities and commercial associations that stand up for the customers and businesses that represent a specific sector perform their task correctly by weeding out those with malintent.

During the past few years, tremendous effort by retail FX firms, as well as regulatory authorities in North America, Britain, Australia and Hong Kong have made giant steps toward ensuring a top quality, sophisticated environment for all.

Why, in that case, if the entire retail FX industry has elevated itself to the level at which it now emulates the institutional and proprietary trading firms of London, Chicago and New York, and there is an enthusiastic leadership among all executives in such firms to continue to refine and innovate so that the traders that use the platforms receive the very finest trading experience, are bogus education companies allowed to proliferate, and sully the shores of the Thames, the Hudson and Lake Ontario?

For several years, as the retail FX giants rose to the prominent and sophisticated level that they are now at, failed traders, dreamers and outright conmen have for several years managed to peddle their bogus services, selling a dream to unsuspecting novice traders, many of whom are intelligent, well educated middle class people who genuinely think that they are about to learn the mastery of electronic trading success from a mentor who lives in abject luxury and has all of the secrets, when the reality is that the vast majority which proliferate the internet possess the mathematical ability of a doormouse and the balance sheet at the bank resembling that of Calum Best.

Indeed, the vast majority of small entities which claim to sell training and all-encompassing education services via elaborate seminars, in some cases on board yachts in the Thames, or in luxurious surroundings in Central London or Sydney’s financial districts, or in cleaner-than-clean suburban Toronto are a triumph of pressure sales, clever imagery and over-zealous marketing over substance.

FinanceFeeds is aware of several of such entities – most of which are operated by several-times-bankrupt individuals masquerading as former Citi traders, or as flashy, Rolex-toting upwardly mobile success stories that trade from their helicopter, their ‘secrets’ being their self-proclaimed route to success, when in reality the environment is designed to instill a sense of greed and aspiration to immediate wealth in the delegate, who is then sold completely worthless software, often for thousands of dollars (or pounds), shown a few trades which are almost always conducted on a demo account, before being signed up to a retail warehouse brokerage which splits the inevitable losses with the ‘educator’ as well as provides IB commission.

If that is not a conflict of interest combined with misrepresentation, then Chernobyl’s water reactor would be eligible to pass California’s zero emissions law with flying colors.

The question is, how do the major regulatory authorities of the world allow these bogus services to proliferate, and to legally do business as ‘educators’ thus bypassing the regulatory remit?

Australia and Britain are home to several of such entities, and a litany of horror stories adorn well recognized internet forums, depicting several years worth of fraudulent activity, yet these firms are out and proud.

The regulators do not even consider this type of education to be financial advice, which it clearly is as the trade leader is recommending exactly how to trade, and providing often bogus software that encourags them to take positions. Social trading platforms are the subject of regulation, and are a genuine component in the electronic trading business, following genuine traders and connected to live, genuine markets via correct and proper regulated br9kers, therefore if that is considered financial advice, then why is the education sector not?

FinanceFeeds is aware of some instances in which educators of this nature will strike a deal with unregulated warehouse brokerages to split losses, often with the warehouse brokerage sponsoring specific courses up front in order to get the delegates into the room – or yacht – in order to make them feel as though they are part of the trading elite. The result is often the entire loss of first time deposit, an equally costly loss of the entire amount it costs to buy worthless trading software which has no proven track record, and a several way split for the trainer in which he gets a revenue share on the losses, plus sponsorship, plus the cost of the software, as well as IB commission. Usually this is then spent immediately due to the addictive lifestyles of those individuals propagating such services, and the hunger to do it all again prevails without recourse.

If the profile of these entities is so high, why are the authorities allowing it?

This morning, the FCA clamped down on CFD products, and the way that they are provided and traded, yet the self-styled trainers continue unabated.

Australia, Britain and North America are the best and most widely respected financial markets centers in the world, and deservedly so, however it is ironic that the ‘education’ con artists operate in those regions. It is, in our opinion, time for the regulators and law enforcement agencies to do something preventative about this, and over time their presence will disappear from the internet, putting paid to a shadow that is being cast over the legitimacy of retail business in top jurisdictions.

In conclusion, it is worthwhile for brokerages to actually explain to their clients, once a KYC procedure has been completed and the client is known to be a novice, not to participate in such schemes. This way, we self-regulate our own industry and protect customers to the best of our own abilities until the regulators realize that this is critical.

Photograph: Famous confidence trickster Arthur Daley


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