NFA Investor Newsletter
|Feb. 3, 2015
In this Issue:
|Credit card use denied at retail forex firms||The top 10 scam trends of 2014||CFTC launches its SmartCheck investor protection resource||12 investment tips for 2015||Visit NFA at Traders Expo New York||Recent enforcement actions|
National Futures Association (NFA) recently announced that the Commodity Futures Trading Commission approved banning the use of credit cards to fund retail forex and futures accounts. The ban became effective Jan. 31, 2015.
"Since our inception, NFA has been committed to protecting investors," says NFA President and CEO Dan Roth. "Forex and futures markets are both high-risk and volatile, and individuals who wish to participate should use only risk capital to fund their accounts. Allowing customers to fund accounts with credit cards encourages them to trade with borrowed money."
This prohibition is a direct result of an extensive study by NFA of forex dealer members' business practices. NFA looked at more than 15,000 retail forex accounts and noted that an overwhelming amount of these accounts were funded by small retail customers using a credit card or borrowed funds, and a majority of these accounts were unprofitable.
"Over the last decade, NFA has made significant strides in its regulation of the retail forex markets," Roth says. "From the increase in capital requirements to mandating content requirements so that all customers could receive comprehensive and accurate account information, this ban is just another very important step to fulfill our mission to protect customers."
With 2014 now in the books, it's time again to look back at the highlights of the past year. Unfortunately, the "highlights" in this case are more sobering than entertaining.
The National Consumer League (NCL) recently issued a report on the top 10 scam trends reported in 2014, based on reports to its Fraud.org website. Once again, victims reported being approached by scammers via telephone most often (42.85 percent), ahead of the Internet (30.07 percent), email (15.71 percent) and postal mail (6.92 percent).
Based on its analysis of more than 10,000 consumer complaints submitted in 2014, consumers should continue to keep an eye out for "refund and recovery" frauds, which was the fastest-growing type of telemarketing scam reported. The predominant version of this scam involved a fraudster who contacted consumers claiming to be a collector of unpaid debts. If consumers questioned the debt, the fraudster frequently threatened them with jail time, legal action or other consequences.
NCL listed the following types of attacks as the top scams reported in 2014:
However, it's not all doom and gloom for victims. One positive trend in NCL's 2014 report is the means in which victims reported sending money to con artists. Previously, wire transfer had been the most popular payment method reported. But in 2014, nearly half (48 percent) of all victims reported paying by credit card when they lost money to a scam. This is positive because victims who pay with credit cards can more easily recover lost funds when they promptly report the suspicious charges to their bank or credit card company than those who pay via wire or pre-paid debit cards.
For more information about other types of scams, read NFA's Scams and Swindles guide.
The Commodity Futures Trading Commission (CFTC) recently launched SmartCheck.CFTC.gov, a website featuring investor education resources and tools to conduct background checks of financial professionals. The site is intended to be a one-stop resource for investors performing due diligence before making any commodities- or securities-related investment decisions.
Prior to the SmartCheck website, investors had to consult a variety of databases from different government and self-regulatory organizations to conduct a thorough background check of financial professionals. Now, this research is much easier because SmartCheck acts as a portal and navigation tool to check the registration status, history and disciplinary record of firms and individuals at National Futures Association (NFA), Financial Industry Regulatory Authority, CFTC and Securities and Exchange Commission.
In addition to being a comprehensive background check tool, SmartCheck also features important news reports that are relevant to investors, as well as educational blogs and videos. The site also currently has three interactive video challenges that allow investors to practice their responses when presented with an investment opportunity.
One of the tools most prominently featured on SmartCheck is NFA's Background Affiliation Status Information Center (BASIC). NFA's database contains registration, disciplinary and financial information about derivatives industry firms and salespeople. The disciplinary information is provided by NFA, the CFTC and U.S. futures exchanges. More than 150,000 investors and industry professionals access BASIC in a typical month. Additionally, in an effort to provide greater transparency to futures commission merchant (FCM) customers, NFA recently made more FCM financial data available on its BASIC pages.
In the coming months, the CFTC's SmartCheck campaign will begin running a series of national online, television and print advertising alongside additional outreach efforts to reduce investment fraud. The CFTC's efforts will help to ensure that as many investors as possible are made aware of these valuable resources.
The New Year is a time for resolutions and, for many, that includes getting their financial investments in order. While these types of resolutions are made with the best intentions, hasty financial decisions can quickly lead to ruin.
Here are 12 investment tips to keep in mind before making any financial decision, courtesy of the Securities and Exchange Commission.
If you're local or just looking for an excuse to visit the Big Apple, you can visit NFA at the 2015 International Traders Expo at Marriott Marquis Hotel in New York City from February 28 to March 2. The Traders Expo offers traders an opportunity to meet face-to-face with, learn from and ask specific questions of a long list of trading experts.
NFA will be located at booth exhibit hall at booth #5408.
Attendees are welcome to stop by, ask questions and pick up informational materials at the Expo.
For complimentary registration to The International Traders Expo New York, click here or call 800.970.4355.
In the fourth quarter of 2014, NFA issued Decisions, Member Responsibility Actions and Complaints against the following NFA Member firms and individuals. Click on the name for more detailed information.
Decisions in Disciplinary Cases
Let us know what you think about this newsletter.
You can check the registration status and disciplinary history of any futures firm or individual.
You can file a complaint online. Be sure to include as much information as you can.
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