Is forex trading a ponzi scheme. The FSB is becoming increasingly concerned about the rise in forex trading platforms being advertised to South Africans, and will investigate these further. only person who managed the books and that he created a very complex structure to hide the evidence of what they suspect to be a Ponzi scheme.

Is forex trading a ponzi scheme

Forex Trading Scam Check List

Is forex trading a ponzi scheme. The spot forex market is said to trade at over $1 trillion a day. Combine that with currency options and futures contracts, and the amounts could literally be another couple of trillion traded on any Therefore, similar to the circumstances that present themselves in a Ponzi scheme, even when those who deliberately engage in forex scams are brought to.

Is forex trading a ponzi scheme


The Financial Services Board has confirmed that Profit Trading, which continues to operate, never placed any trades. The same story is repeated by each investor. They invested money with the promise of a high return which was payable after three months. Since , individuals have invested large amounts of money and in some cases initially received returns which encouraged them to invest further, or to convince family members to invest.

By September , the payments started to dry up with excuses about backlogs and technical issues. Some clients, like Mr P, who wrote to us to say that he invested R50 in October and never again saw his money, received no returns at all. In May this year, we decided to pay a visit to the Sandton branch and we found the offices closed without notice. I have lost my money and my co-worker lost R30 Another investor, Mr M, convinced his mother to invest her early retirement package in Profit Trading.

She has been admitted to hospital because of this. There is now no peace between me and my mother. Every time she calls me, I become very sad. As part of a joint investigation by City Press and Moneyweb, in interviews with former senior employees we were told that an amount of around R52 million was invested by 3 investors and that the total value in the accounts reflects an amount of R million.

Staff maintain that Ndlovu was the only person who managed the books and that he created a very complex structure to hide the evidence of what they suspect to be a Ponzi scheme.

They claim he never shared the information with the rest of the staff or the founders of the various branches that sold Profit Trading software. There are no specifics here. Ndlovu also confirmed that he continues to sell his training and trading technology as this does not require a financial services provider FSP licence. There are reports that he is operating out of offices in East London and Richards Bay. Our trading happens offshore. In a complaint to the press ombudsman about our first story, he denied that his Sandton offices are closed or that they use a trading robot.

A yearlong investigation into Profit Trading by the Financial Services Board FSB resulted in the licence being withdrawn and a case opened with the commercial crimes unit. In an interview with City Press, Caroline da Silva, deputy executive officer for financial advisory and intermediary services at the FSB, said after a protracted and thorough investigation, it was clear that no trades were ever placed. The FSB first received a complaint about the business in September However, upon following it up the individual retracted the complaint.

In July the FSB received another complaint, allowing it to launch an investigation. By January they had enough evidence to suggest that fraud had been committed and the licence was suspended in February and permanently withdrawn by September As the FSB has no criminal authority, they had to hand the investigation over to the commercial crimes unit.

At the time of going to print, City Press had not received a response from the spokesperson for the commercial crimes unit. Ndlovu declined to comment further, stating: He also claims that he is appealing the suspension of his FSP licence, although the FSB confirmed that no appeal had been lodged. The only hope investors have at this stage is to provide their details to the FSB.

What is clear is that Myles Ndlovu will fight these allegations in court and it will take a long time to resolve. Many investors raised concerns that Profit Trading managed to obtain a financial services provider FSP licence and that this was used to legitimise the business and in its marketing. Profit Trading was issued a licence in This licence was a category one licence and could not be used for the trading of forex instruments on behalf of investors.

It also makes it an offence to use a licence in any marketing material for unauthorised business activities. The FSB investigation was greatly delayed by a reluctance of investors to speak to the regulator. Da Silva notes that the FSB is becoming increasingly concerned about the rise in forex trading platforms being advertised to South Africans, and says the board will investigate these further. These platforms are unregulated and based offshore, creating the perfect opportunity for more scams.

They use concepts that most people do not understand when it comes to forex trading. People are easily fooled into believing they are a legitimate business which can make them a lot of money. This week the FSB issued a warning against Financika, which provides a forex trading platform and advisory services, stating that the company is not authorised to render financial services in South Africa and does not represent an authorised financial services provider.

The company is completely unregulated with no chance of recourse if you lose your money. City Press called the company regarding the investor warning and was told to send an email. We never received a reply. A reader wrote to City Press claiming that he had lost more than R in just three weeks through a similar forex trading platform.

When the margins are very thin they ask you to deposit additional funds to rescue your account. Judging by the comments so far, their modus operandi is the same: This is an excellent description of how many of these rogue forex platforms operate.

Savage says it is important to know that it is illegal to use a credit card to fund an offshore investment account of any kind and, as such, no South African should be doing this. However, are those firms then regulated anywhere else? This article first appeared in City Press. You must be logged in to post a comment. Investors may lose millions in suspect forex trading scheme June 15, Investors had managed to locate him, and when he was unable to provide them with answers, they had contacted the police.

How Profit Trading used its FSP license to legitimise its business Many investors raised concerns that Profit Trading managed to obtain a financial services provider FSP licence and that this was used to legitimise the business and in its marketing. The company, however, used this licence to legitimise the unlicensed business.

Beware of forex trading platforms Da Silva notes that the FSB is becoming increasingly concerned about the rise in forex trading platforms being advertised to South Africans, and says the board will investigate these further. Previous post How much do you need to retire? Next post Why we fall for investment scams. Leave a Reply Cancel Reply You must be logged in to post a comment.


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