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How to Deal With a Fraudulent Stock or Forex Broker

by Basharat Shah

Overview

Ever since foreign currency trading was opened to the public, incidences of forex scams increased significantly. Naive and new investors dreaming about venturing in to projects that could make them millionaires overnight are the ones most vulnerable to forex scams. Fraudulent brokers will often invite you to invest more and more money but resist your attempts to withdraw profits. Follow these steps to learn how to deal with these unscrupulous brokers.

Step 1

Do not get involved with a fraudulent broker in the first place. When opening an account, read reviews about the broker thoroughly. Trade only with well-reputed companies, banks and financial institutions. Do a full background check of the broker.
Step 2

Formulate a plan of action. If your broker is based in the United States, you can file a claim or complaint against him to the Division of Enforcement at the Commodity Futures Trading Commission (see Resources below). The Division of Enforcement investigates violations of securities laws, recommends Commission action either in a federal court or before an administrative law judge, and negotiates settlements. The Commission offers a Reparation Program under which you can file a claim against your broker for monetary looses. If your broker is based in the UK, then the parallel body that you may contact is Financial Services Authority.
Step 3

Communicate directly with your broker prior to filing any such claims or complaints. If you get your money back without going through the hassle of the enforcement process, take it. Many times the broker would be willing to negotiate with you once he becomes aware of your serious intentions of filing a complaint. This is especially true of the brokers who are registered with the Commission or the Financial Services Authority. These bodies are very known for penalizing brokers heavily upon identification of even the smallest flaws, so brokers will not want to get them involved.
Step 4

Involve your credit card company or bank. If your broker is not allowing you to withdraw your money back, you can file a dispute through your bank. Many times your credit card issuing bank will be able to charge back the full amount that you had transferred to the broke account.