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Forex Trading And Fraudulent Brokers: Toronto Attorney Insights – Data provided by Chartered Professional Accountants Canada shows that a huge percentage of Canadians are victims of financial fraud. In a 2022 survey, 46% of respondents said they had been the target of scammers at some point.
Brokers in Canada and around the world defraud unsuspecting investors every day without getting caught. Therefore, it is essential to vet your investment brokers and advisors, and their firms, before trusting them with your business.
Forex Trading And Fraudulent Brokers: Toronto Attorney Insights
Luckily, vetting brokers is something everyone can do, even if you’re not a financial guru or stock market expert. Here’s how you can determine if your stock broker is the real deal.
Dr. A. Neil Campbell*
Brokerage fraud comes in all shapes, forms and sizes. But knowing what this can look like is the first step in protecting yourself and your money from unscrupulous intermediaries.
A clear example of fraud is a case reported by the Financial Industry Regulatory Authority (FINRA) that resulted in a former representative of Caldwell International Securities Corp. being permanently banned from the industry. The suspect, Richard Adams, engaged in excessive trading using two client accounts between July 2013 and June 2014. Adams earned over $57,000 in commissions, costing clients over $37,000 in financial losses.
According to the official Canadian government website, citizens should also be aware of pyramid and Ponzi schemes, boiler room schemes, “pump and dump” tactics, registered retirement savings plan fraud, and forex market scams. All of these are commonly used to separate Canadians from their hard-earned dollars.
Use these 8 steps to evaluate the legitimacy of your broker and protect yourself from fraud. 1. Avoid brokers who “cold contact” you.
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Be wary of any broker or consultant who contacts you unsolicited by a company you have not done business with in the past. These brokers often reach out via email, phone calls, or even paper letters.
They may use high-pressure sales approaches, offer you “once in a lifetime” investment opportunities, or refuse to send you written investment information. These are clear signs that they are not operating with integrity. 2. Do your homework
Start searching for financial professionals with a basic Google search using broker and company names. This may be enough to cause news articles or reports of alleged fraud or lawsuits to appear in digital publications or forums.
Next, directly research the regulatory bodies used by the company. Financial advisors and their firms are required by law to register with provincial and federal securities regulators. All of this registration information is publicly available. 3. Know your broker
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If you are looking for a reliable financial advisor, you need to talk openly with him about the products, services and returns offered. Ask as many questions as necessary about what the brokerage offers and how it has handled clients who have similar needs and requirements to yours.
Also ask what type of relationship you will have with your advisor. Ideally, they should work in line with the fiduciary standard, which dictates that they must put your interests before their own when giving advice or recommending investments. Investment advisors are required by law to follow this standard, but broker-dealers are not, although some broker-dealers still adhere to this standard.
If the broker you are talking to can’t give you clear answers or seems rushed or pressured, take your investments elsewhere. If they are willing to provide the information you need, remember to inquire about fees, rates and commission percentages that could affect your payments, profits or passive income. Registered advisors will also need to provide you with both halves of the Form ADV.
Investing and forgetting is an easy way to become a target of fraud. Keep an eye on your statements, both in paper and online, and make immediate note of any errors. Legitimate brokers tend not to make mistakes. But mistakes can happen. How they handle your concerns will tell you everything you need to know about their reputation.
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Ask your broker questions if your returns are lower than expected or if there are unexpected changes in your portfolio. If they can’t provide clear answers or you don’t understand their explanation, talk to a higher-level brokerage professional. 5. Watch out for suspicious activity
Fraudulent activity can be subtle, but it is essential to be able to spot and recognize it if you want to protect your investments.
If, for example, your stockbroker is known to withdraw funds from client accounts without written authorization or refuses to deliver securities or liquid funds to client accounts, you may be dealing with an illegitimate and potentially dangerous brokerage business. Stay away! Your broker should never take any action relating to your portfolio without your prior written consent. 6. Licensing and Registration
Every single brokerage firm, investment advisor, stockbroker and investment salesperson must be registered and authorized by law to sell securities to customers. Additionally, every security product sold must be registered with federal authorities. This applies to traditional brokerage firms as well as those that offer online stock trading.
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If your broker cannot provide proof of this license and registration, he or she may not be operating legally or honestly. Legitimate brokers can provide these documents easily and promptly upon your request. 7. Fast order execution
If your stockbroker has never failed to execute your investment orders in a timely manner, his actions may constitute fraud. Or at least they indicate that fraud may occur in the future.
Every broker is legally obliged to execute your orders as quickly as possible and cannot refuse to execute an order under any circumstances. 8. Concentration of investments
Have you ever experienced excessive losses in your portfolio due to investing most of your funds in one market sector or one type of security? If so, you may be a victim of overconcentration of your portfolio.
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A scrupulous broker will diversify your portfolio. This reduces risk by spreading investments across a range of different industry sectors and stocks, balancing stocks with other investment classes such as forex, commodities and real estate. If your broker invests too much money in one or two specific stocks or sectors, this can constitute investment fraud and unnecessarily increase risk. If in doubt, act immediately
If you suspect you may be the target of investment fraud, remove your investments from your advisor immediately. Next, file complaints with provincial, federal and local private regulators.
You can also contact your provincial securities commission if you are unsure. Each Canadian province has a specialized division that deals with complaints against advisors, brokers and financial planners. In the unlikely event that these approaches are unsuccessful, you may need to hire a private attorney to address the matter. The Department of Special Investigations said on Tuesday that a television actor and a famous DJ were summoned for questioning in connection with the Forex-3D fraud after financial transactions linked them to the founder of the scheme.
DSI investigators called 11 more witnesses in two cases linked to the Forex-3D case. Three were to be questioned about the Ponzi scheme underlying the alleged fraud, and the other eight about the associated money laundering, said Pol Maj Gen Woranan Srilam, a senior financial crimes investigator.
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The first three witnesses were due to meet investigators on August 3, 4 and 7. They had not contacted the DSI asking for postponements.
Actor Ratthaphum “Film” Tokhongsap and Wichian “DJ Petjah” Kusolmanomai were among eight others to be questioned over money laundering linked to Forex-3D, Pol Maj Gen Woranan said.
They were summoned because investigators found financial transactions linking them to Apiruk Kothi, the founder of Forex-3D, he said.
Forex-3D lured people into investing in what they believed was a foreign exchange trading platform with false promises of high returns. It was unlicensed but operated from a flashy website run by Apiruk, who was arrested in January 2021. More than 9,800 investors reportedly suffered total losses of at least 2.48 billion baht.
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“Some witnesses attempted to testify in writing, but to make statements for the first time it is necessary for witnesses to appear in person before investigators, to ensure clarity in the questioning. Mr. Ratthaphum will testify before DSI investigators on August 8 and Mr. Wichian on August 17,” the senior investigator said.
He believed that many assets acquired through Ponzi had been converted or laundered. Investigators would try to trace these assets.
Actor Ratthaphum, who is running for a House seat under the Palang Pracharath Party banner in Bangkok in the May 14 elections, admitted on his Instagram account on Monday that he had received money from Mr Apiruk. He said that in 2018 he had an online game production business and that the founder of Forex-3D had hired him to produce mobile phone games.
According to investigators, Mr Apiruk transferred 81,000 baht to the actor’s bank account on September 6, 2018. Between June 18, 2019 and July 1, 2019, a company linked to Mr Apiruk had transferred another 6 million baht to the actor’s bank account. ‘actor. .
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Mr Ratthaphum insisted he was innocent and said he would testify before the DSI on August 8 as scheduled. The actor said that he would provide proof of the employment contract
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