Binary Options: Targeting Seniors and Other Investors
If you haven’t heard, finance and securities industry regulators have mobilized their significant resources in an effort to protect American investors, especially retired and senior citizen investors. The latest in the regulatory offensive against securities fraud and broker misconduct involves something called “Binary Options.” This week, the Financial Industry Regulatory Authority (FINRA) issued one of its Investor Alerts about binary options. According to FINRA:
Trading binary options can be an extremely risky proposition. Unlike other types of options contracts, binary options are all-or-nothing propositions. When a binary option expires, it either makes a pre-specified amount of money, or nothing at all, in which case the investor loses his or her entire investment. Trading binary options is made even riskier by fraudulent schemes, many of which originate outside the United States.
Binary Options May Be Scam
FINRA, along with the SEC, and the CFTC (Commodity Futures Trading Commission) have cautioned all investors to take a very long, very close look at the issuers of binary options before even considering investing in them. Of particular concern are investment deals and products which come to us from far-off lands, where regulators are not so aggressive and devoted to investor protection as they are here at home.
Many of the binary options scams work like this. The firms claiming to be options traders never deposit investor funds into the investor’s account, or freeze funds when they are requested for return, or demand a fee for the return of assets. Of course, none of these transactions are legal.
If you must invest in options, FINRA suggests several steps to check on the legitimacy of the options trading firm. As an investor, you have many helpful resources at your disposal. Use them.
- CFTC's website to see if the binary options trading platform is a designated contract market.
- SEC's EDGAR system to check to see if the binary options trading platform has registered the offer and sale of the product with the SEC.
- SEC's website regarding exchanges to determine if the binary options trading platform is registered as an exchange.
- FINRA BrokerCheck® and the National Futures Association's Background Affiliation Status Information Center (BASIC) to check the registration status and background of any firm or financial professional that you are considering.
PA & NJ Securities Litigation Law Firm
If you or someone you know has suffered financial injury as a result financial exploitation, broker misconduct, or investment fraud, please contact our team of experienced securities attorneys immediately for a free consultation at 1-855-462-3330 (toll-free) or by using our online contact form.