Several fraudulent commodity brokers are taking advantage of the public, failing to provide them with detailed and transparent cost information. They also are failing to have a physical address or convenient hours for customer service.
Unregistered offerings
Investing in unregistered offerings is often an effective method for legitimate companies to raise funds, but it’s important to be cautious. Scammers often use these types of offerings to conduct investment fraud.
The Securities and Exchange Commission (SEC) has brought numerous cases against brokers and companies in recent years. These cases have resulted in fines and suspensions of individuals and companies for violating federal securities laws. The SEC’s Office of Investor Education and Advocacy has issued an Investor Alert about unregistered offerings. It is important to read this alert carefully, as it will offer some important tips for investors.
Scammers often use unregistered offerings to lure investors into buying shares in illiquid companies, and then sell them at a huge profit. These types of schemes are less effective now that people are more information savvy. The price of the shares drops sharply after the scammer dumps them.
Failing to provide detailed and transparent cost information
CFTC has been under attack for failing to spot fraudulent commodity brokers. In recent years, the agency has created thousands of pages of new regulations to ensure customer protection. However, it has not provided any details about how it plans to coordinate the implementation of these regulations. CFTC Chairman Gary Gensler has outlined a number of plans to address the fallout from the Peregrine case.
Wasendorf’s scheme began when an CFTC investigator sought to fine the firm for violating customer funds rules. Wasendorf refused to allow the regulators to conduct direct access to his bank accounts. Instead, he used doctored paper bank statements.