US Securities and Exchange Commission (SEC) announced how the company behind scam broker EZtrader has to pay more than $1.7 millions for misleading traders. EZtrader is a well-known scam binary broker that has been blacklisted on FBO for a very long time due to their unethical practices.
EZtrader Scam USA
SEC reported how EZTD Inc, parent company of WGM Services Ltd, doesn’t have a valid license for providing binary options trading service for the US traders. Rember, the only way traders in the US can trade binary options is via CFTC regulated exchanges such as NADEX binary options exchange.
An additional reason why EZtrader binary scam has to pay such a hefty fine is because they failed to deliver a disclosure about binary options being risky, which SEC estimated to be misleading and potentially dangerous for traders who are not aware of what binary options really are.
Read more about EZtrader scam from SEC’s perspective.
EZTD, that operates EZtrader, was in addition to two unprofessional practices mentioned above, also downplaying the risk of binary trading by using skillful marketing. According to SEC, around 4,000 US citizens opened a binary options trading account with EZTD brands, including EZtrader, but only 3% of them made any profit at all.
Deputy director of the SEC’s Division of Enforcement, Stephanie Avakian, explained how EZTD emphasized the possibility of making a significant profit, while at the same time, they made a significant amount of income from traders’ losses. Avakian also said that binary brokers are obliged to have precise risk disclosure so that traders know that end result doesn’t have to be profit.
7 Ways to Recognize Binary Options Scam
SEC also issued an additional warning regarding potential binary options scams that can be harmful to traders. In the warning, SEC specialists listed 7 ways that will help US traders to recognize scam brokers in the binary market.
They especially warned that binary options brokers employees often use fake names, or simply lie about their experience and qualifications which make them very dangerous. Scam binary brokers often provide special education and training in psychology, and their agents or ‘personal brokers’ and ‘account managers’ can be very convincing especially to beginners and inexperienced traders or people in financial difficulties.
According to SEC, 7 warning signs that broker might be a scam are:
- Unsolicited offers – cold calling, spams etc.
- High-pressure sales – usually involve threats and scare tactics
- Identity thefts – representatives are asking for personal documents and photocopies without a solid reason for are asking for credit card details.
- Frequent changes of representatives – if every time another representative calls, see it as a red flag.
- Difficulties with withdrawals – scam brokers frequently use different tactics to avoid payments and processing withdrawals.
- Credit card abuse – unfortunately some scam brokers are using private data to make unauthorized deposits and withdrawals by using traders’ credit cards.
- Government and regulator impersonators – many scam binary brokers are prone to this technique and are convincing people how they are employed by the government or that binary trading is a new type of savings etc.
Find out more about what SEC has to say about binary options scams.
SEC reminded traders how they may not receive full SEC’s protection in case they trade with an unregulated broker. Everyone interested in binary trading in the US can easily check the status of the company simply by visiting websites of US financial market regulators such as CFTC.
US traders can also trade with safe brokers, like Nadex binary exchange!