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NFA Investor Newsletter January 15, 2008 Printer Friendly Version |
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| In this Issue: | The Lure of Investor Chat Rooms and Bulletin Boards | Higher Capital Requirements for Forex Dealer Members | Resolve to be a Smart Investor in 2008 |
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Beware the lure of investor chat rooms and bulletin boards We all like to feel that we are part of a community - a place where we can express our opinions with a group of people who share our interests. The Internet provides us with many opportunities to do just that through live chat rooms, online forums and bulletin boards. In many cases, you can obtain valuable information from these Web sites. You can also, however, obtain false information and even become a victim of fraud. At NFA, we frequently receive telephone calls and emails from individuals who cite information they read in a chat room or bulletin board. Many times, this information is inaccurate. Remember, most chat rooms, online forums and bulletin boards allow individuals to post messages using an alias. Some posters even use multiple aliases. That means it is very difficult for you to know the true identity of the individual behind the message. Don't assume that the person posting the information is an investment professional that has no ulterior motive in sharing his information with total strangers. The North American Securities Administrators Association (NASAA) offers the following tips to remember when participating in a chat room, online forum or bulletin board:
In addition, Microsoft Corporation lists the following 5 safety tips for chat rooms:
1. Never give out your personal information in a chat room. For additional information, check out NASAA's Investor Alert on Internet Fraud and Abuse.
Resolve to be a smart investor in 2008 It's the time of year when we make all sorts of resolutions. The Alliance for Investor Education (AIE) recommends that we all "Resolve to Save and Invest." AIE, a non-profit organization made up of the United States' leading financial-related foundations, non-profit organizations, associations and governmental agencies, lists 13 top resources for consumers in the "Resolve to Save and Invest in 2008" section of the AIE Web site. "The Alliance wants to make sure that Americans are armed with the best available information they need to easily set aside funds for a secure future," said AIE President Michael D. Jones, who also serves as senior executive vice president and chief administrative officer for Financial Industry Regulatory Authority (FINRA). NFA's publication, "Opportunity and Risk: An Education Guide to Trading Futures and Options on Futures", is one of AIE's recommended resources for consumers. For a complete list, visit the AIE's Web site.
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NFA Forex Dealer Members must meet higher net capital requirements Many of the U.S. firms currently offering retail off-exchange foreign currency (forex) trading are Members of NFA. Effective December 21, 2007, these firms must maintain a minimum net capital requirement of $5 million. "Because a Forex Dealer Member's activities create greater financial risks than the type of traditional exchange-traded futures and options, these firms need to maintain a larger amount of capital," says NFA General Counsel Tom Sexton. "We believe that this additional net capital requirement will provide better customer protection." All Futures Commission Merchants, including Forex Dealer Members, are required to submit monthly financial statements to the Commodity Futures Trading Commission. The CFTC compiles this information and posts it on its Web site (www.cftc.gov). In addition, Forex Dealer Members submit weekly financial statements to NFA so that NFA can closely monitor the firms' financial status. Remember that forex trading is a high-risk venture. NFA offers several resources to help you understand the risks of forex trading, including a brochure, an online learning program and a forex investor alert. In addition, individuals should always check the registration status of any forex firm (using NFA's online Background Affiliation Status Information Center) before opening an account.
Recent Enforcement Actions In the fourth quarter of 2007, NFA's Business Conduct Comittee issued Decisions, Member Responsibility Actions and Final Orders in Registration Cases against the following NFA Member firms and individuals. Click on the name for more detailed information.
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