Protection against fraud in currencies trading

The Commodity Futures Trading Commission, which regulates U.S. futures markets have formed a task force to investigate and prosecute fraud in the retail market for trading foreign currencies outside of commodity exchanges, a field that is riddled with unscrupulous operators. It will focus on fraud in the off-exchange retail foreign currency market, as well as to work with other federal and state regulators and criminal authorities.

The CFTC and state securities regulators have adviced the public to be cautious when trading foreign currencies especially outside of major exchanges such as the Chicago Mercantile Exchange which is at best very risky and at worst, fraudulent.

When an investor buys a foreign exchange contract, he or she buys the right to purchase an amount of foreign currency at a fixed price in dollars. Investors hope to profit from ups and downs in currency markets. But sharp swings in prices also can cause large losses, especially when an investor borrows money to make an investment and can wind up owing more than their initial investment was worth.

The fraudulent schemes often come in the form of unsolicited phone calls and efforts to convince an investor to quickly transfer cash.