The Emergence of Managed Forex Account Scam - A Fraud You Need To Watch Out For!
Excerpt: The Financial Conduct Authority (FCA) and Action Fraud have issued public warnings about investment frauds involving phony online trading platforms. This warning comes after reports of crypto and forex investment scams that tripled to over 1,800 last year. Fraudsters promise high returns on cryptocurrency and foreign-exchange investments, causing victims to lose a total of £27 million in 2018/19.
Have you become entangled in a forex trading scam and are unsure what to do? According to recent studies, nearly one out of every ten traders becomes entangled in a Forex-related fraud and the dangers that surround them.
Forex traders have defrauded innocent people with millions of dollars in the currency exchange market. But don’t worry! Because all of the money that has been lost can be recovered using the strategies outlined by expert recovery agents. Before we get into those strategies, let’s first define currency trading, how scammers operate, and the various techniques we can employ to recover your stolen funds.
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What is Currency Trading & The Scams Surrounding it?
Currency trading takes place on the forex market, also known as the foreign exchange market. Currency is important because it allows us to purchase goods and services both locally and globally.
International currencies must be exchanged in order to conduct international trade and business. Currency is traded on the Foreign Exchange Market (Forex Market). It is the world’s only nonstop, continuous trading market. In the past, institutional firms and large banks dominated the forex market, acting on behalf of clients. However, it has recently become more retail-oriented, with traders and investors of all sizes taking part. While the forex or foreign exchange market appears to be legal on the surface, the report states that “there are many potential negative actors in the area, and it is a good environment for spoofing, ghosting, and front-running.”
The rise of online trading forums has only heightened the risks, allowing for more fraudulent promotional schemes, exaggerated profits, and the inability to pay for victories. “Furthermore, certain actors are using manipulative software to rig the system.” The primary issue with forex trading is a lack of transparency, as well as opaque regulatory systems and insufficient control. There are, however, forex items available on regulated exchanges. Similarly, reputable brokers who make a living on the market exist. The Financial Conduct Authority (FCA) and Action Fraud have issued public warnings about investment frauds involving phony online trading platforms. This warning comes after reports of crypto and forex investment scams that tripled to over 1,800 last year. Fraudsters promise high returns on cryptocurrency and foreign-exchange investments, causing victims to lose a total of £27 million in 2018/19.
You may be able to recover your money if you have been duped. What you should do and whether you will receive a refund are determined by the circumstances. Fund recovery organizations can help you find the fraudster and, in most cases, guarantee that you will get your money back. They work tirelessly with their skilled staff and technology to prepare legal documents in order to reclaim your funds. Foreign exchange (FX) scams frequently target individuals via newspaper advertisements, radio, television, and the internet. The promotions offer you an exciting opportunity to participate in the forex market, buy software, or enroll in trading classes.
In most cases, the scam artist simply steals your money rather than investing it in anything. If you have money invested in the forex market, you may not be aware that it is a hazardous investment. You will almost certainly lose some or all of your investment. Forex traders should avoid false promises; in this post, we’ll look at some common forex scams and how to spot them.
Is It Possible To Foresee Forex Scams?
Understanding how to correctly trade in the Forex market is the single most critical thing a person can do to avoid getting deceived. The problem is that finding trustworthy Forex exchange brokers/teachers is difficult.
The novice must ensure that the broker has made the money they claim to have made; due diligence is essential in this case. The Forex market is not a game of chance but rather a legitimate business where trillions of dollars are exchanged every day. Before trading for real money, use demo accounts to discover how to make long-term earnings. Be warned that, like any other professional talent, mastering the Forex market effectively can take years. Claims that you can make money quickly should be avoided at all costs. Do not take statements at face value; instead, conduct your own investigation. An inexperienced trader should proceed with caution, analyzing statistics and developing their own functions that they have already tested and demonstrated successfully on a sample account. This will take some time, but it will be more beneficial to the novice trader than relying on a computer program. Do not invest in something that appears to be “too good to be true.”
Another consideration is the legitimacy of the company making the claims or selling the expertise/course. Investigate the region/jurisdiction where the company is registered, as many exchange scammers will trade from a location where they believe local law will make it difficult for them to be prosecuted globally.
The Various Categories of Managed Trading Accounts & Scams
If a forex trader does not have the necessary skills or is too busy to trade, they can open a trading account and have it managed by a professional account manager. These professions charge a fee for their services.
There are numerous examples of managed accounts that could be considered Forex fraud. Typically, a trader will take your money and spend it on a variety of high-end items rather than investing it. When the victim asks for their money back, there isn’t enough money to go around. Scammers have exploited this by offering to manage traders’ accounts before defrauding them. They may make deals that are not in the best interests of the client or steal their money outright. Traders should examine the account manager’s track record to determine how successful he has been in the past, as well as their risk management strategy and previous drawdowns, to determine how efficient the fund manager is. The account manager must also hold a valid operating license issued by the relevant authorities.
Red Flags of Managed Forex Account Scams
The first issue is that there are numerous managed account scams. These are, in some ways, far worse than forex broker or forex product scams. Scammers who use managed accounts typically try to convince victims to invest as much money as possible, even their entire life savings.
They may suggest taking out a mortgage on the victim’s home or obtaining other loans in order to invest even more money. Giving in to this type of con can ruin your entire life. As if that weren’t enough, even a legitimate forex account manager can lose your account due to mismanagement.
In order to avoid the most common managed account scams, you must first understand the distinction between a regular managed forex account and a pooled account. In a typical managed forex account, the money is transferred from you to your forex broker. You send your funds to the account manager, who is then supposed to pool funds from various clients into a trading account controlled by the account manager.
Although legitimate pooled accounts are managed, pooled accounts are much more vulnerable to fraud. Anyone with access to a computer can generate bogus account statements. You never know where your money is in a pooled account. Many of these accounts promise a high monthly return on investment. There is no such thing as an actual guaranteed high percentage return on investment in Forex, and anyone who claims to offer one is almost certainly a scam. The other 2% of the time, the individual is simply an overly enthusiastic idiot. You can kiss your money goodbye in either case.
Usually, the account manager convinces only one person to invest. It makes no difference how much money is involved. Monthly returns ranging from a few percent to 20 or even 30 percent are guaranteed. Now comes the good part. NONE of the funds are ever invested in the foreign exchange market. If the account manager promises a monthly return of 10%, the funds can be hidden in a mattress and payments made for a period of ten months.
This may appear to be a foolish way for the manager to make money, but it isn’t. He tells his first victim that reinvesting half (or more) of that 10% will increase the account’s growth rate. As long as more money from existing and new clients continues to come in faster than money is paid out, the account manager does not have to waste a single second of his time risking money in forex trades. A well-managed Ponzi scheme can last for years while providing investors with reasonable returns. The problem is that if there is a significant drop in new investment, the entire thing will collapse very quickly, assuming the scammers do not decide to take the money and run even sooner.
Too often, these Ponzi-style scammers don’t always bother to pay out money. Instead, they’ll try to convince you to reinvest it all or offer significantly higher rates of return with an automatic reinvestment plan. When it comes time to withdraw some of the money, there will be a slew of wildly different excuses for delays in transferring funds, combined with more concerted efforts to entice the victims into putting even more money in with promises of better future returns. Of course, the only ones who profit in this “Ponzi with no payout” scenario are the scammers.
Another HUGE red flag is if the managed account company only accepts e-currency (with the exception of PayPal, which does investigate scam and fraud claims while many others do not). Managed forex accounts frequently involve large sums of money. You are not purchasing a product. You are lending them YOUR money to invest with. If a managed forex company refuses to accept a check or even a wire transfer, you have no way of knowing which bank or even which country your money is going to. You don’t need to know where someone’s bank is if you want to spend $200 on an EA. You do if you are investing your life savings.
Even if a pooled account provides no guarantees, it is still a risky investment. You are entrusting your entire financial situation to an account manager. Even if the manager is legitimately trading Forex and is very skilled, you are relying on them not to make a huge mistake with your money. Given the risks, I would never recommend investing in a pooled account unless you have an incredibly extraordinary amount of proof that the company is legitimate and the account manager is an incredible forex trader who always adheres to strict risk management rules. Even so, all it takes is for a good account manager to succumb to temptation, and all the money can vanish in a single day.
There are three ways for your account manager to withdraw funds from a typically managed forex account. The first two are self-evident. The account manager (or account management company) may charge a monthly flat fee and a commission based on profits, which will generally be deducted directly from your account as specified in your contract and LPOA. Either or both of these are possible and should be clearly disclosed in advance. The third method can turn even the best account management system into a ravenous beast that eats away your profits and, in extreme cases, your principal.
The third method by which an account manager can withdraw funds from your forex account is as follows. Some account management teams will only manage your account if you use their preferred forex broker. This generally means that the account manager is also an IB for that broker and is paid a percentage of the spread or commission charged by your forex brokerage for each trade executed in your account (whether by you or by your account manager).
As a result, whether you profit or not, more trades equal more profits for the account manager. Under these conditions, many account managers will place many more trades solely to earn these spread commissions. This is known as churning the account in the stock market. There are legitimate account management firms that only trade accounts for which they are IBs, but you should be aware that the temptation to churn your account will always be present. If you decide to use such a forex account management company, you should carefully discuss how many trades and how large of trades they will place in a typical month with them. Another disadvantage of this arrangement is that it limits your ability to select a forex broker who can meet your other forex trading needs. It also means that while you may get a good account manager, you will be stuck with a lousy forex brokerage, which will significantly reduce the profits that should be coming into your account.
In the case of forex managers who charge a monthly fee, inquire whether the first month can be a free trial. Also, ask whether they will waive the fee if there are no profits for one or more months. You are paying them to make money, not to practice trading with your account. Any legitimate trader will experience drawdowns from time to time, but there should be no reason to pay a fee if the drawdowns last several months. Of course, you already know that any fee guarantees must be included in your LPOA and contract.
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Managed Forex Account - A Good Idea or Not?
A Forex managed account provides a transparent environment, safety, and security of funds for both the money manager and the investor. Both parties benefit; the money manager earns an additional profit by collecting the management fee, while the investor can profit from the Forex market without the need for a strategy.
Managed trading accounts will require a forex account manager to execute transactions, you will want to ensure that you have done your due diligence and reviewed the past performance of the account manager you wish to hire.
Allowing someone else to manage your money has the significant advantage of freeing up your time to pursue other interests. A person with a career or another business who is unable to deal with the day-to-day trade analysis, execution, and other activities required for effective trading in the forex market may be an ideal candidate for opening a managed account. By hiring another person to manage their personal forex account, the account owner avoids having to deal with the decision processes and challenges of day-to-day trading.
A managed account provides the trader with a number of benefits. Experience, which can only be gained through long-term market participation, is the only asset that can reduce or even eliminate the significant risks associated with currency trading. Because a beginner, by definition, lacks such a background, working with a money manager may appear to be a good option. Since everyone is different and some people are more prone to emotional extremes than others, trading’s emotional difficulties cannot be tolerated by everyone.
Working with a money manager can also help you overcome this problem. Another issue that discourages new traders from seriously committing to currency trading is a lack of time. Another advantage of this approach is the availability of a full-time account manager who can devote full attention to trading for his clients. Finally, many online traders who act as fund managers provide historical data to provide insight into potential future returns. This knowledge may also assist the newbie in selecting the best offer for himself.
Trading forex on your own can be tricky if you are inexperienced, as you could lose all or a significant portion of your funds. Forex-managed accounts are one of the best investment opportunities you can use to earn a monthly profit based on the amount you invest. A managed forex account enables a professional manager (or someone claiming to be one) to trade your funds on your behalf in exchange for a salary or a fixed share of the profits. You can choose a specialized firm or a broker with a sophisticated software feature that allows your account balance to be traded by an expert. The latter service does offer an additional level of risk protection. You should always be cautious when choosing a money manager you can trust and who has a good reputation in the industry. While the vast majority of money managers are legitimate, there have been a few notable scams in the past.
Managed online accounts, like other online trading platforms that help novice, intermediate, and advanced investors, are a relatively simple way for investors to gain access to the currency markets with less risk than attempting to develop an independent forex investment strategy. A managed account also provides you with the expertise of a network of traders, researchers, and forecasters with expertise in various aspects of foreign exchange. That is why the best reason to start with this option is that you can benefit from their knowledge and follow their tried-and-true trading strategies.
The client authorizes forex asset managers to trade on their behalf, allowing the broker to pay the asset manager a monthly performance fee, which is a common rule for all regulated brokers. This fee is calculated solely on the profits earned by the client’s account over the previous month. It is critical to note that the asset managers are never permitted to add or withdraw funds from the client’s account under the terms of the forex account management agreement. International anti-money laundering regulations only allow the client to make additions or withdrawals to their broker’s account.
All Good Opportunities Come with Attached Risks
All of the above sounds simple and appealing, but there are numerous inherent dangers hidden behind that simple appeal. On the low end, only you have the incentive to treat your investments and positions with extreme caution.
Having a professional manage your money means that they may not pay as close attention to it as you would. Letting the manager trade on his or her behalf allows the trader to benefit from the manager’s experience. However, by doing so, he or she forfeits the opportunity to learn in the markets through practice and study. In essence, he is trying his fortune to that of the manager, depriving himself of the mental independence and analytical mentality that is a lifelong requirement for a trading career.
By entrusting the emotional responsibilities of trading to the manager, the account owner condemns himself to perpetual slavery to the manager’s will and skill. He will never be able to evaluate the market independently or trust his own judgment because he is unable to withstand the emotional pressures associated with trading. Finally, the manager will gain complete confidence in his trading decisions, resulting in unpredictable and potentially dangerous outcomes.
Trading with a Forex-managed accounts service has some significant advantages, but risk lingers around every corner in various forms. A managed forex accounts provider may be extremely profitable, but what if the trusted manager becomes ill and is unable to trade? Another aspect of this problem is that past results are not always predictive of future outcomes. Even a profitable account manager is likely to experience a rough patch. And if you join the service while the losing streak is in full swing, the trader loses money. Such traders would always remove, and if the losing streak ends, the trader will be unable to benefit from the profitable streak.
While account managers typically trade using online foreign exchange brokers under a managed forex account agreement, the owner is generally not permitted to trade their own funds in the same account. Once the funds are placed in a managed forex account, certain conditions outlined in the agreement may restrict the owner’s immediate access to their funds. Furthermore, some management firms will charge a penalty for withdrawing funds early, as well as a percentage fee based on the profits generated by their trading activities.
Finally, while a money manager’s track record can be a helpful indicator of their abilities and prowess, it can also be misleading. To begin with, many of these records cannot be evaluated because there is insufficient background information. It is also true that the black box of performance data is incomplete for successfully assessing the manager’s trading style and method. Finally, past performance is not a predictor of future results: a track record of positive returns does not guarantee future success.
Managed forex accounts are best suited for most investors, but the disadvantages are determined by three factors.
The manager may be inconsistent, disorganized, or suspicious. The worst-case scenario is when a manager manages two different accounts, so he takes huge opposite risks in both accounts, and one of them loses money while the other makes a lot of money.
You’ll be fortunate to be on the right side. The manager may be inexperienced or merely a student, learning on your dime.
The manager may be an IB with the broker you’re using, which means he earns money on every trade he executes on your account/money.
His goal will be to make as many trades as possible, regardless of the outcome. The broker may be unregulated and untrustworthy. Through spread manipulation, slippages, swaps, and requotes, they steal from you.
The market may be experiencing extremely high uncertainty, exposing your money to extremely high risks.
Forex Account Managers Who Have Scammed Their Clients in The Past!
We believe that the preceding discussion has already made it possible to visualize the scammer operating under the guise of a money manager.
It is impossible to constantly monitor the manager’s actions, the nature of the relationship between the manager and his client necessitates a degree of blind trust between the two parties. Furthermore, in order to profit and successfully manage the account’s risk, the manager must have some degree of independence in how he uses the funds at his disposal. Neither of these would be considered excessive requirements in a good relationship; however, when the manager’s primary goal is mismanagement and misappropriation, the principles of the relationship become dangerous and harmful to the client.
Richard Matthew Jr
Matthews founded and served as Chairman of White Pines Trust Corporation in San Diego, California, in July 2000.
The WPT website and other solicitation materials for Pinnacle CapitalFund both claimed an eight-year cumulative performance record of 591 percent while also guaranteeing that 75 percent of its customers’ investments are protected from loss each month. When Matthews’ company WPT was taken to court, he tried to get out of it by claiming that the CFTC (the suing party) had no jurisdiction over the matter, as well as other minor technicalities like the language used and the fact that Matthews had not sent the email that was presented in court as evidence.
The court, however, saw through the charade and found significant flaws in the company’s claims, such as “WPT had been managing private assets through the Pinnacle Capital Fund since 1995, and that the Pinnacle Capital Fund had yielded double-digit profits on investments for each year since 1995.” and many others, which clearly demonstrated that Matthews’ primary goal was to encourage people to invest in his company by providing false information and fictitious references.
Matthews later admitted that his claims were false. Following an investigation into the fraud, the US Commodity Futures Trading Commission (CFTC) sued both WPT and Matthews, seeking $14.8 million in disgorgement and restitution. In 2005, Matthews pled guilty to wire fraud for a scheme that netted him more than $30 million, which he used to purchase a 12-acre island off the coast of Belize.
Russell Cline founded Orion International, a foreign currency trading firm, in 1998. Russell, a Baker City house painter, established his trading company in Portland, Oregon.
When you first hear about a company that managed to attract 600 investors and a total investment amount of around $27 million in four years, it sounds like a fantastic rags-to-riches story. The true story of Russell Cline, on the other hand, is a little different.
Russell Cline, arrested in 2006, was sentenced to eight years in prison for running a fraudulent investment operation. His company, Orion, promised low-risk returns ranging from 60% to 200 percent per year. The company, however, was unable to return those investments, citing reasons such as poor trades and typographical errors. Russell stated that he had lost 97 percent of their investments and requested additional funds.
The real story was that Russell Cline didn’t have a degree in currency trading. He possessed neither knowledge nor experience. In fact, Cline had not lost all of his money. His true motivations were to dupe the investors into giving him a large sum of money, which he would then use illegally to enrich his life. A significant portion of the investors’ funds was actually spent on: a three-million-dollar river house, seven homes worth over $500,000, a $500,000 sound system, 42 high-end automobiles, private jets, and other high-end items, and $12,000 in pornography.
Cline was found guilty in 2003, and all of his assets were frozen. He was charged with 39 counts of money laundering in 2004, and he was also arrested that year for possession of a psychoactive stimulant. Cline pleaded guilty in July 2005 to soliciting at least $16 million from his investors. In 2006, he was sentenced to eight years in prison and ordered to pay $33 million in restitution. He was freed in March of 2012. According to reports, Russell Cline was arrested again in 2015 (this time for reasons unrelated to investment activity) and was working on new investment schemes at the time.
Why Should You Hire a Funds Recovery Company to Help You Get Your Money Back?
It can be difficult for those who invest in online trading to tell whether money lost was due to the inherent risks of trading or whether it was illegally orchestrated, and it can be nearly impossible to know if you have been a victim of a forex broker scam without expert advice.
Trading in the foreign exchange market is always risky, and money can be lost due to mismanaged funds. This is not to say that losing money due to mishandled funds is acceptable. True, no one can guarantee that what has been lost will be recovered, but in most cases, a portion of the investment can be recovered.
The first step is to report the scammers, which allows legal authorities to intervene and freeze funds where possible.
- Report the broker to the authorities;
- If you used a debit or credit card, contact your bank and request that the transactions be blocked.
- Confirm that the Forex broker is regulated so that you can, if possible, rely on the country’s supervisory authority.
- Seek the advice of a forex lawyer.
- Contact a fund recovery firm to get your money back.
Hiring a Third Party Saves Your Time
One consideration is the financial outlay, but what about the time and effort required to investigate scams properly? Even at the most basic level, scam recovery can place a significant strain on an organization’s time and resources.
It’s a bother and a distraction you don’t need. As a result, one of the most significant benefits of enlisting the assistance of experts is the speed and ease with which the procedure can be completed. All while allowing you to focus on what really matters: running your business.
Hiring a Third Party Saves Your Money
Professional fraud recovery services are not always free, but they can be the least expensive option. Again, you must consider how DIY asset recovery can be a significant drain on precious resources.
Furthermore, there are no guarantees that the DIY method will yield a favorable outcome. The larger the scam and the more urgent the issue, the more money you could save by hiring help.
The asset collection industry is now governed by a plethora of rules, and well-informed customers will not be afraid to sue if their rights are violated.
Asset collection agencies are aware of this, which is why they are well-versed in the law. Third-party collection agencies are well-versed in both federal collection regulations and state collection laws. Allowing a fraud collection firm to recover payments on your behalf lowers the legal risks associated with attempting to recover funds on your own.
Official Authentic Documentation
Collection agencies keep detailed records of their interactions with scammers. If you try to prosecute a scammer again, the fund recovery agency will keep detailed records of every attempt to contact the scammer. This documentation demonstrates to the court that you went to great lengths to recoup the swindle.
Scammers see opportunities to target us in these uncertain times. The Claimers can guide and support you. You can Visit Our Website for more guides.
Managed Forex Accounts is a Tricky Business!
Every trade involves some level of risk, but as long as you can quantify it, you can manage it. Just keep in mind that risk can be magnified by using too much leverage in relation to your trading capital, as well as by a lack of liquidity in the market.
Taking some risk is the only way to generate good returns with a disciplined approach and good trading habits. Be cautious if you want to invest in a managed forex account! Investigating before investing will require a significant amount of time and effort. However, earning all of the money you want to invest takes a considerable amount of time and effort on your part.
Before you tell me that it’s too challenging to vet a forex account manager or a forex management company, consider what you’d do if your entire investment vanished due to fraud or incompetence. If you are seriously considering putting your life savings into an account with someone because they have a friendly website or because your friend told you about them, either conduct a thorough investigation yourself or consider hiring a professional investigator to check things out before putting hundreds of thousands of dollars in the hands of a stranger.
- Make your own checks to make sure that any investment opportunity is legitimate.
- Take basic precautions to guard against identity theft.
- Make sure the privacy parameters on your social media accounts are up to date.
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