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NFA issues investor alert regarding new forex rules
On October 18, NFA issued an investor alert outlining the impact of new rules issued by the Commodity Futures Trading Commission on consumers investing in the off-exchange foreign currency (forex) markets. The rules require, with certain exceptions, any firm acting as a counterparty to certain retail forex transactions to register with the CFTC as a Retail Foreign Exchange Dealer (RFED) or Futures Commission Merchant (FCM). In addition, the rules require, with certain exceptions, any individual acting as a forex solicitor, account manager or pool operator to register as Introducing Brokers (IBs), Commodity Trading Advisors (CTAs) or Commodity Pool Operators (CPOs) or as an associated person of one of these entities and become Members of NFA.
"We want to ensure that forex investors know that the entities they have previously been conducting business with are now required to be registered with the CFTC and be NFA Members," said Larry Dyekman, director of Communications and Education at NFA. "Investors can check the registration status of any forex firm through NFA's Background Affiliation Status Information Center, or BASIC, which is available free of charge on ourwebsite."
BASIC contains current and historical registration information concerning all current and former CFTC registrants, including name, business address and registration history. BASIC also provides information concerning disciplinary actions taken by NFA, the CFTC and all U.S. futures exchanges.
"If you are researching a firm, you should also conduct a background check of all the individuals listed as principals of the firm," said Dyekman. "Sometimes the firm will have no disciplinary history, but one or more of the principals may have been disciplined while working at other firms."
Read the full text of the forex investor alert.
FINRA warns investors about High Yield Investment Programs
The Financial Industry Regulatory Authority (FINRA) recently issued an investor alert warning investors about the risks of high yield investment programs (HYIPs). According to the alert, HYIPs are "unregistered investments created and touted by unlicensed individuals." People touting these products cite high, unsustainable rates of return with little or no risk.
FINRA's alert describes some of the more common practices scammers use to lure unsuspecting investors to invest in HYIPs. The alert also gives practical tips on how to spot HYIP scams and where to turn for help.
