Regulators Crack Down So Unregulated Brokers Change Tactics

Unregulated Brokers Slipping Through The Cracks

In a report first broken by FinanceMagnates in an exclusive story unregulated brokers are switching tactics. At least, they are moving to new locales and targeting new markets with the same old tricks. The problem they faced, a crack down on non-regulated brokerages and on their marketing tactics, forced many reputable brokers further into the light, and many unregulated brokers out of business. The ones that are holding on have simply taken steps to avoid regulator attention and slip through the cracks.

The first solution was simple, stop targeting people in countries with regulators, and especially those countries actively prosecuting binary options fraud. This mean attention is now focused on unregulated countries which today often means emerging markets and underdeveloped nations where hard working people are not as savvy to Internet based cyber crime as the rest of us. The second problem was less simple to affect if not so hard in theory. When regulators began cracking down on marketing tactics that meant call centers, the most fraudulent and aggressive of those centers located outside of regulated nations. CySEC’s solution was forcing call centers to be located within regulated jurisdictions and accept oversight, the unregulated brokers solution was to move their operations to countries they could operate in without fear.

Canada has been fighting binary options fraud for a long time. They’ve had so many problems the nations diverse group of provincial regulators have formed a special task-force to fight it and are even proposing a full ban. The only problem is that their efforts have proved futile up til now. CySEC regulated brokers are not allowed to market to citizens outside their jurisdiction which protects Canadians from legal binary options, the unregulated off-shore black-hat brokers are still up to the same old tricks, only they are getting better at it.

Two Canadian provinces issued new warnings against unregulated brokers. The first is from Manitoba’s MSC against TORoption. TOROption is operated by Smart Choice Zone LP from a virtual office in Glasgow, Scotland. It is not regulated by the FCA or CySEC and is another SpotOption white label. The broker is accused of accepting and marketing to Canadian clients without registration, regulation or licensing, the same old story. The second warning comes from British Columbia’s BCSC, one of the most vocal of all Canadian regulators. It is against Hedgestone is also accused of accepting Canadian clients even though it is not registered in Canada and the website says no Canadian allowed. Hedgestone is operated by Belize registered firm Smart Choice Zone LP but located in Bulgaria and not regulated in any way.

The REDList Gets Longer

The US CFTC and SEC created a registration deficient list, the REDList, as a means of warning investors of unregulated binary options and forex brokers operating in the US. The list got off to a slow start but has recently seen a number of new additions. The latest round includes 71 new names, both forex and binary, and also the names of individuals operating as “investment” advisers without authorization. As with all non-CySEC nations, this list includes a lot of names you will recognize as scams, and a few that are regulated to operate in Europe so be warned.