In August 2003 NFA issued an Investor Alert discussing the risks of trading in the retail off-exchange foreign currency (forex) market. Since that time, participation in forex trading by retail investors has increased dramatically. There are current 37 active Forex Dealer Members registered with NFA. These 37 firms hold over $800 million in customer funds.
Unfortunately, the amount of forex fraud has also increased dramatically. Since 2001, the Commodity Futures Trading Commission (CFTC) has filed 93 enforcement actions in federal court against hundreds of firms, owners and employees for defrauding over 25,000 customers who lost over $395 million in forex schemes. In addition, NFA has taken enforcement actions against a number of its Forex Dealer Members.
It is critical, therefore, that individuals who are considering participating in the forex market understand the risks associated with this product and conduct due diligence before making any investment decisions.
For additional information on retail forex trading, you should consult NFA's brochure, "Trading in the Retail Off-Exchange Foreign Currency Market: What Investors Need to Know." NFA has also developed a Forex Online Learning Program, an interactive self-directed program explaining how retail forex contracts are traded, the risks inherent in forex trading and steps individuals should take before opening a forex account. Both the brochure and the online learning program are available at no charge to the public in the Investor Learning Center section of NFA's Web site (http://www.nfa.futures.org).
As mentioned above, retail off-exchange forex trading carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose all of your initial investment and be liable for additional losses. Therefore, you should not invest money that you cannot afford to lose. Be aware of all the risks associated with forex trading and make an informed decision after consulting with your financial advisor and considering your own financial situation and objectives.
NFA and the CFTC encourage members of the public to bring to our attention any suspicious activities involving foreign currency investments or suspicious Internet Web sites. Contact NFA's Information Center at 1-800-621-3570 or file a complaint through NFA's Web site (http://www.nfa.futures.org/basicnet/Complaint.aspx). Contact the CFTC at 1-866-366-2382, visit the CFTC's Customer Protection Web page (www.cftc.gov/cftc/cftccustomer.htm) or fill out the CFTC's Internet Report Form (www.cftc.gov/enf/enfform.htm).
NFA is a self-regulatory organization subject to oversight by the CFTC. NFA's primary mission is to protect investors and maintain market integrity.
NFA Members can file many of their required documents electronically.