… Futures Trading Commission (CFTC) and the North American Securities Administrators Association (NASAA) warn that off-exchange forex trading by retail … the foreign currency market but … Foreign Exchange Currency Fraud Alert Beware of Foreign Currency Trading Frauds The advertisements seem too good to pass up. They tout high returns coupled with low risks from investments in foreign currency (”forex”) contracts. Sometimes they even offer lucrative employment opportunities in forex trading. Do these deals sound too good to be true

What are forex contracts? For ex contracts involve the right to buy or sell a certain amount of a foreign currency at a fixed price in U. S. dollars. Profits or losses accrue as the exchange rate of that currency fluctuates on the open market. It is extremely rare that individual traders actually see the foreign currency. Instead, they typically close out their buy or sell commitments and calculate net gains or losses based on price changes in that currency relative to the dollar over time. Forex markets are among the most active markets in the world in terms of dollar volume. The participants include large banks, multinational corporations, governments, and speculators. Individual traders comprise a very small part of this market. Because of the volatility in the price of foreign currency, losses can accrue very rapidly, wiping out an investor’s down payment in short order. How do the scams work? Forex scams attract customers with sophisticated-sounding offers placed in newspaper advertisements, radio promotions, or on Internet sites. Promoters often lure investors with the concept of leverage: the right to “control” a large amount of foreign currency with an initial payment representing only a fraction of the total cost. Coupled with predictions about supposedly inevitable increases in currency prices, these contracts are said to offer huge returns over a short time, with little or no downside risk. In a typical case, investors may be assured of reaping tens of thousands of dollars in just a few weeks or months, with an initial investment of only $5,000. Often, the investor’s money is never actually placed in the market through a legitimate dealer, but simply diverted - stolen — for the personal benefit of the con artists. What are regulators doing? The CFTC is the federal agency with the primary responsibility for overseeing the commodities markets, including foreign currency trading. Many state securities regulators also have the right under their state laws to take action against illegal commodities investments. Sometimes, the CFTC and the states work together on cases.

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