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Maya Mandzikasvili

5 December 2018

Regulation

New BaFin Note Will Help Investors to Identify Fraudsters

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December 05, 2018 | AtoZ Markets On Tuesday, the German Federal Financial Supervisory Authority (BaFin) released a three-page guide, which will help investors to identify the scam brokers. 

New BaFin document focuses on the three instruments scammers might use

Comparing with the previous German authority practice, when it was issuing warnings about specific firms, the new notice of BaFin is broader and more thorough. A three-page document is titled as “Warning About Rip-Off Investments on the Internet”. Introducing the guide, BaFin pointed on three products that most fraudsters like to deal with : binary options, cryptocurrencies and contracts-for-difference (CFDs). According to the German Financial Authority specialists, people who work for the fraud brokers use the cold call practice to lure traders into trading by promising them huge profits.

Fresh insights on the scamming practice

In their notice, the German Financial Authority raised some interesting points. First of all, BaFin noted, that very often platforms used by fraud brokers do not show the real situation happening in the market. Victims of the scammer see a fake platform, thinking that they are making lots of money but, in reality, fraud firms have already stolen their funds. A real-life example of such fraudulent trading practice happened a few months ago in London. A binary options scammer took all client deposits and cashed them out. At the same time, the clients who logged on to their ‘platform’ thought that they were getting huge profits.

Furthermore, in their three-page guide, the German financial watchdog explained what happens after the financial affair. According to the regulator, the scammers will sell data of their victims and might even target the same people again, as they have already shown being particularly manipulative. Moreover, BaFin noted that many fraud firms might act as ‘recovery experts,’ who ‘help’ to get back stolen funds.To summarize all aforementioned, the new BaFin guide is a very important document and a must-read guide for anyone who in one way or another is engaged with the financial market, BaFin noted.

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fraud cold call binary products German Bafin
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