NFA Investor Advisory—Avoiding the Latest Fraud Techniques
July 6, 2022
NFA is the industrywide, self-regulatory organization for the U.S. derivatives industry. NFA strives every day to safeguard the integrity of the derivatives markets and protect investors against fraud.
The purpose of this advisory is to notify investors of scammers' latest fraud techniques and how to avoid them. NFA encourages all investors to conduct due diligence before making investment decisions and educate themselves on how to spot potential scams.
NFA's BASIC system is a free on-line tool that investors can use to research the background of derivatives industry firms and professionals. Before investing or sharing sensitive information, search BASIC to verify a firm's NFA ID, membership status and contact information.
In BASIC, the profile for any currently approved NFA Member firm displays a green "NFA Member Approved" banner below the firm's name. A variety of non-Member firms have NFA ID numbers and appear in BASIC: firms exempt from CFTC registration and NFA membership; former NFA Members; and firms whose NFA membership is pending. Firms with BASIC profiles displaying an orange banner titled "Not an NFA Member" are not currently NFA Members.
Scammers attempt to confuse investors using a variety of tactics. Avoid scams by following the steps below.
- When a derivatives industry firm or professional provides you an NFA ID, search for the ID in BASIC.
- Confirm that the BASIC profile containing the NFA ID shows a green "NFA Member Approved" banner. Remember: an NFA ID alone does not demonstrate NFA membership.
- Confirm that the name, main business address and phone number listed on the BASIC profile exactly match the name, main business address and phone number used by the firm or professional soliciting your business. Illegitimate firms sometimes utilize names similar to those of current NFA Members in an effort to deceive investors (e.g., ABC Commodities LLC is not the same as ABC Limited). Scammers may also utilize an NFA Member's NFA ID to gain a victim's trust and feign legitimacy, which is why it's crucial to ensure the information provided matches BASIC.
If you have any doubts, concerns or questions about a firm or professional's NFA membership status, contact NFA's Information Center (firstname.lastname@example.org or 312-781-1410 or 800-621-3570).
Regardless of how an investment opportunity arises, one rule of thumb always applies: if an offer sounds too good to be true, it probably is.
If you've been a victim of a scam and reside in the United States, consider filing a complaint with the appropriate regulator listed below:
- For a derivatives-related complaint (i.e., involving futures, options on futures, forex or swaps) involving a pending, current or former NFA Member (as displayed in BASIC), file with NFA.
- For a derivatives-related complaint involving a firm or professional that has never been an NFA Member (as displayed in BASIC), file with the CFTC.
- For a complaint involving securities, file with the SEC.
For more information, contact NFA's Information Center (email@example.com or 312-781-1410 or 800-621-3570).