Investor Newsletter


April 9, 2018

Money Smart Week 2018

This April marks NFA's 12th year of participating in the Federal Reserve Bank of Chicago's Money Smart Week, which runs from Saturday, April 21, 2018 through Saturday, April 28, 2018. This national initiative is dedicated to promoting financial literacy and education through events and workshops.

As part of Money Smart Week, NFA will host a free webinar on Thursday, April 26, 2018 at 11:00 a.m. CT/12:00 p.m. ET to educate investors about how to recognize financial scams and the importance of conducting thorough due diligence. The one-hour webinar will include presentations by the U.S. Commodity Futures Trading Commission (CFTC), Office of Customer Education and Outreach, the U.S. Securities and Exchange Commission (SEC), Office of Investor Education and Advocacy, and the FINRA Investor Education Foundation.

During the webinar, experts from each agency will provide attendees with tools to help them identify warning signs of investment fraud.

In addition, on Wednesday, April 25, 2018 from 10:00 a.m. to 2:00 p.m. CT, NFA will join regulatory and enforcement agencies during the Financial Regulators Fair in Chicago. At this event, taking place at the State of Illinois Building, participating organizations will distribute information on financial protection and investing, among other topics.

Enhanced Protection for Retail Forex Customers

Investor protection is a key element of NFA's mission. To enhance customer protection, NFA recently amended NFA Compliance Rule 2-36 to require forex dealer members (FDM) to provide retail forex customers with greater transparency regarding the costs associated with forex transactions.

The amendments, which became effective on April 5, 2018, require an FDM to disclose the following, if applicable, to each customer on a per-trade basis in the same currency as the base currency of the account on the customer transaction confirmation statement:

  • Commission and any other fees;
  • For transactions where an FDM is using straight-through processing, any mark-up or mark-down the FDM imposes on the price the FDM received for the offsetting position to the customer's order; and
  • For transactions where an FDM is not using straight-through processing, the mid-point spread cost and a description of the mid-point spread cost in a form and manner required by NFA.

For more information, read NFA's December 4, 2017 Rule Submission Letter to the CFTC.

Imposter Scams: Don’t Be Fooled By Guarantees or Money-Making Pitches from “Regulators”

FINRA recently issued an investor alert regarding scammers posing as industry regulators in an attempt to separate customers from their money.

FINRA included a number of methods used to make these scams look and sound more realistic, including:

  • Investment guarantees;
  • Materials with official logos, names and contact information; and
  • Requests for personal information.

To help investors avoid being scammed, FINRA offers the Scam Meter and Risk Meter tools. These tools guide customers through a few short questions to measure the legitimacy of an investment pitch.

CFTC Warns Customers to Avoid Pump-and-Dump Schemes

The CFTC issued a customer protection advisory that warns customers of pump-and-dump schemes that can occur in thinly traded or new “alternative” virtual currencies, digital coins or tokens.

Pump-and-dump schemes are mostly anonymous and are organized in public chat rooms or via mobile messaging apps. They are coordinated efforts to create phony demand (the pump) and then sell quickly (the dump) to profit by taking advantage of traders who are unaware of the scheme. This type of market manipulation occurs in the largely unregulated cash market for virtual currencies and digital tokens, typically on platforms that offer a wide array of coin pairings for traders to buy and sell.

The Federal Trade Commission: Imposter Scams

The Federal Trade Commission (FTC) recently released a compiled list of the top frauds of 2017, the most popular of which were imposter scams. An imposter scam is when someone requests money while posing as another individual or organization. The FTC offers a number of resources to help customers protect themselves against imposter scams. If you feel that you have been the target of an imposter scam, or are concerned about an investment pitch you recently heard or saw, file a complaint with the FTC using the Complaint Assistant.