Foreign Exchange Currency Trading Frauds. - Advisory Warning No. 9 of 2009

ADVISORY WARNING

FOREIGN EXCHANGE CURRENCY TRADING FRAUDS

The British Virgin Islands Financial Services Commission (“FSC”) is issuing this advisory warning under Section 4 (1) (l) of the Financial Services Commission Act, 2001.

The FSC is warning investors to beware of Foreign Exchange Currency Trading Frauds. Many entities are professing to offer high yield, low risk investment opportunities from investments in foreign currency contracts. These deals are normally scams and although they may look like a new sophisticated form of investment opportunity it is a form of financial fraud especially perpetrated on retail customers.

Foreign currency (Forex) contracts involve buying and selling certain amounts of foreign currency at a fixed price in U.S. currency and the profits and losses are determined by the fluctuation of the given currency in that foreign market.

They may be legitimately traded either on a recognised futures exchange or in the interbank market. Forex scams are normally attractive and sophisticated-sounding and may be advertised via newspapers, radio promotions, or the Internet. In most cases customers are told that they will obtain tens of thousands of dollars in as little as a few weeks or months with as small a sum as $5000.00. Fraudulent currency trading firms often tell their customers that they can or should trade in the interbank market or that they will do so on their behalf. The money is then diverted or simply stolen by the scam artist. It should be noted that the interbank market does not usually include individual or retail customers. Such claims should therefore be treated with extreme caution or scepticism.

Members of the public are asked to note the following warning signs of these Forex scams:

1. Promises that sound too good to be true;

2. Claims that most customers make money;

3. Unsolicited phone calls offering investments especially from unfamiliar sounding company names;

4. Phony success stories from fictional customers;

5. Be especially cautious if you have acquired a large sum of cash and have been looking for an investment vehicle;

6. High pressure efforts to convince you to send or transfer cash immediately to the firm whether via the internet or over-night delivery;

7. Promises of minimal risks: currency futures and options markets are in fact very volatile and carry substantial risks;

8. Promises of a fixed return, or promises of a maximum amount that you can lose;

9. Promises to recover any loss you may suffer;

10. Difficulty in getting background information.

Do not invest what you cannot afford to lose and make sure that you understand all the procedures and risks, investigating to ensure that the person offering the forex investment is properly licensed and has a reputable business history;

The FSC warns that if these companies do not disclose information on the risks involved and tell clients otherwise then they would be involved in illegal schemes.

Signed:

Robert A. Mathavious

Managing Director/CEO

British Virgin Islands Financial Services Commission

Pasea Estate, Tortola

VG1110 British Virgin Islands

Telephone: (284) 494-4190

Facsimile: (284) 494-5016

E-mail: [email protected]

Website: www.bvifsc.vg

Hours: Monday – Friday, 8:30 a.m. – 4:30 p.m.