The 2017 annual report of the financial regulatory authority, the Canadian Securities Administrators (CSA), emphasized its continuing fight against binary options scams, devoting one whole section of the report to the issue.
As a result of rapidly increasing reports from victims of binary options fraud over the past three years, with losses for Canadian investors estimated to be in the millions, a 2015 committee formed to study the problem was transformed by the CSA into the Binary Options Task Force in 2016.
Outright Financial Fraud
The problems with binary options trading extend well beyond just the risk of investment losses. Many investors have been lured by ads for binary options trading that were simply outright scams to deprive them of their money. A Manitoba couple lost almost $200,000 when they were taken in by an ad for binary options trading that used the unauthorized likeness of a prominent Canadian celebrity. The couple repeatedly deposited money with the company, based on reports that their investments were making money. In fact, the couple’s money was never invested at all, and the reports of profitability were faked.
With losses for Canadian investors estimated to be in the millions, a 2015 committee formed to study the problem was transformed by the CSA into the Binary Options Task Force in 2016.
Regulatory Action And Education
Since its formation, the Task Force has taken aggressive action on multiple fronts. It has coordinated action with banks and credit card companies to prevent transactions with unregistered firms offering binary options trading. The Task Force has also taken steps to ban online ads for binary options trading.
The Task Force’s most far-reaching efforts have involved working with communications and regulatory enforcement officials to develop an educational campaign designed to increase public awareness of the high risks associated with trading binary options. In March of this year, which is Fraud Prevention Month in Canada, the CSA went as far as to launch a new website – binaryoptionsfraud.ca – to provide Canadians with easy access to information on the dangers of binary options trading. In conjunction with launching the website, CSA spokespeople from the Autorité des marchés financiers (AMF), the Financial and Consumer Services Commission of New Brunswick (FCNB), and the Manitoba Securities Commission (MSC) spoke publicly in the media about binary options related frauds that have cost Canadian investors millions of dollars.
Ironically, Jason Roy of the MSC reported that he had personally received a cold call soliciting him as a potential client for a binary options trading firm.
Using ads on social media and its own Twitter account – @CSA_News – the CSA’s campaign to educate investors and deliver the basic message that trading binary options is not worth the associated risks has garnered coverage from several hundred national and international media outlets. The recently-launched binary options fraud site has reached more than 10,000 visitors, and the CSA Task Force’s online ads have generated over 150 million impressions. The Task Force expects its educational efforts to extend their reach in the coming year.