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Screenshot of a breaking news alert e-mail from Q2 2017
One of Canada’s provincial financial markets regulators, the Ontario Securities Commission (OSC), has issued a notice to potential investors regarding a firm which is operating under the brand Forex Barter Inc.
The OSC highlights that Forex Barter is not registered to engage in the business of trading in securities or advising anyone with respect to investing in, buying or selling securities.
Ontario, whose largest city is Toronto, the third most prominent financial center in North America, is becoming considerably more vigilant over recent months with regard to monitoring unregulated FX and binary options companies which are attempting to operate within its jurisdiction.
A search conducted by LeapRate indicates that Forex Barter offers a High Yield Investment Program (HYIP), which is similar to a Ponzi scheme insofar as that it promises unsustainably high return on investment by paying previous investors with the money invested by new investors. A great many companies providing HYIPs operate from anonymous offshore bases which make them hard to track down.
Operators generally set up a website offering an “investment program” which promises very high returns, such as 1% per day (3778% APY when returns are compounded every day), disclosing little or no detail about the underlying management, location, or other aspects of how money is to be invested.
The U.S. Securities and Exchange Commission (SEC) has said that “these fraudulent schemes involve the purported issuance, trading, or use of so-called ‘prime’ bank, ‘prime’ European bank or ‘prime’ world bank financial instruments, or other ‘high yield investment programs.’
Orchestrators of HYIPs often seek to mislead investors by suggesting that well regarded and financially sound institutions participate in these bogus programs.” In 2010, the Financial Industry Regulatory Authority (FINRA) warned that “the con artists behind HYIPs are experts at using social media, including YouTube, Twitter and Facebook, to lure investors and create the illusion of social consensus that these investments are legitimate.”
To this effect, it is likely that the OSC’s attention had been attracted by the firm’s lack of regulatory licensing in Ontario, and also the actual structure of the firm including the product that it offers.
Click here to read the announcement from OSC.