CityPress - - Business -

The Fi­nan­cial Ser­vices Board (FSB) is be­com­ing in­creas­ingly con­cerned about the rise in forex plat­forms be­ing ad­ver­tised to South Africans, and Caro­line da Silva, deputy ex­ec­u­tive of­fi­cer for fi­nan­cial ad­vi­sory and in­ter­me­di­ary ser­vices at the FSB, 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’s head of­fice is based in the Repub­lic of Van­u­atu which is a small is­land in the Pa­cific Ocean. It is com­pletely un­reg­u­lated with no chance of re­course if you lose your money. Although they use a Cape Town tele­phone num­ber this is re-di­rected to an overseas call. 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 R200 000 in just three weeks through a sim­i­lar forex trad­ing plat­form.

“They are pro­fes­sional scam­mers, with the first trades you will make profit, on their ad­vice of course, and they en­cour­age you to de­posit more money with guar­an­teed prof­its. Once your ac­count reaches more than $30 000 [R386 000] they ask you to open a po­si­tion that they know will go against you and will liq­ui­date your ac­count. When the mar­gins are very thin they ask you to de­posit ad­di­tional funds to res­cue your ac­count.

“That is how they de­fraud your money in a le­git­i­mate way. Judg­ing by the com­ments so far, their modus operandi is the same: de­posit more money un­til your ac­count gets liq­ui­dated. You don’t get out of this scam alive, you lose all your life sav­ings.”

This is an ex­cel­lent de­scrip­tion of how many of these rogue forex plat­forms op­er­ate. Charles Sav­age, CEO of South African-based al­ter­na­tive in­vest­ment bro­ker GT247, says the lure of huge overnight prof­its al­ways brings Ponzi schemes to the fore.

“The fronting of these schemes as ‘forex trad­ing busi­nesses’ seems to be the flavour of the day so clients need to be su­per­vig­i­lant. It is an old busi­ness prac­tice just find­ing new life in ‘forex’.”

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. Sec­ondly, any in­sti­tu­tion not reg­is­tered and there­fore reg­u­lated by the FSB should also raise a con­sumer’s due dili­gence re­quire­ments.

“It is not to say that there are not rep­utable in­tu­itions off­shore that are not lo­cally reg­u­lated. How­ever, are those firms then reg­u­lated any­where else? On­line searches and ver­i­fi­ca­tion checks with the com­pany’s reg­u­la­tors should be a bare min­i­mum be­fore open­ing any off­shore ac­count,” says Sav­age.

– Maya Fisher-French

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