Commodity Futures Trading Commission, Regulation, Government Policy, Regulatory Bodies, Work-Life Balance, Respiratory Tract Diseases

Commodity Futures Trading Commission, Regulation

Derivatives Regulator Warns of Fee Scams During Coronavirus Pandemic

Fee scams that promise easy ways to make money with no trading experience are targeting people working from home or lost jobs amid the pandemic, the CFTC says

4/9/2020 3:50:00 AM

Fee scams that promise easy ways to make money with no trading experience are targeting people working from home or lost jobs amid the pandemic, the CFTC says

The Commodity Futures Trading Commission said it has received hundreds of complaints about such fee frauds in recent months and warned individual investors should be particularly aware of the schemes, which promise easy ways to make money with no trading experience, the agency said in an advisory note.

Newsletter Sign-up Risk and Compliance Journal Our Morning Risk Report features insights and news on governance, risk and compliance.PREVIEWSUBSCRIBEVictims usually are introduced to unregistered brokers online through social media and messaging apps, such as Telegram and WhatsApp, the CFTC said. Swindlers try to convince investors that they can earn high profits from home if they join the brokers’ program to trade in financial products, such as binary options, foreign exchange programs and cryptocurrencies, according to the advisory.

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Victims are shown text updates or statements that state the amount they invested is growing but are asked to pay high commissions, money transfer fees and taxes when they try to claim profits, according to the CFTC. The profits aren’t real and the swindlers disappear when the victims stop paying, the CFTC said.

The schemes described by the CFTC highlight the challenges individual investors face as they look for alternatives to the turbulence they face in the stock market, said John Nowak, a partner at law firm Paul Hastings LLP who specializes in securities law. Stocks have swung wildly in recent weeks as money managers grapple with how the pandemic has affected the value of businesses in every industry.

More From Risk & ComplianceThe advisory can also be a note of caution for compliance officers at financial institutions, Mr. Nowak said. Clients’ activities, such as an unusual payment or transfers of funds overseas, especially to particular jurisdictions or locales that are high risk or to suspicious entities, may warrant closer scrutiny during this period, he said.

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