A non-U.S. firm agreed to pay $1.7 million to settle SEC charges that it had misled investors into trading binary options over the internet. The SEC cautioned that "other firms may be out there actively trying to do the same thing."
The SEC alleged that the firm failed to: (i) register the binary options; (ii) register as a broker-dealer; and (iii) disclose on its trading platforms that there was significantly greater potential for investors to lose rather than earn money – less than 3% of the approximately 4,000 U.S. investors who opened accounts with the firm profited on their investment. The firm, by contrast, had called itself a "highly profitable trading platform" and "an extremely lucrative avenue for individuals who are looking to see an increase in income," according to the SEC.
The SEC also called attention to an SEC Investor Alert which explains binary options websites and how they may be used for fraudulent schemes.
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