Losing money in trading scams is not uncommon. Scam forex brokers use relentless account managers who pressure unwary and unprofessional investors into investing money in high-risk trades only to lose it unfairly.

You get juicy incentives, such as gifts and bonuses once you open an account, trade, or upgrade to keep you in their tentacles. These brokers set unfair trading conditions, charge expensive hidden fees, and frustrate any efforts to withdraw your money.

If you have already lost your money to such scammers, you can still recover it, reach out to us and we will guide you through the process. You can also learn how to spot a trading scam and avoid falling into such traps in the future.

Many scam forex brokers get away with their unethical ways. However, this is not the case for four firms that are the source of misery for numerous investors in the UK:

  • Hoch Capital Limited, which trades as iTrader and TradeATF
  • Magnum FX (Cyprus) Limited which trades as ET Finance
  • Rodeler Limited which trades as 24option
  • F1Markets Limited trading as Investous, StrattonMarkets, and Europrime

All Four Scam Forex Brokers Blacklisted from Offering Services in the UK

After UK investors lost hundreds of thousands of pounds in CFD investments supposedly endorsed by celebrities on their social media pages, the Financial Conduct Authority took action against the four brands to protect its consumers from further losses.

According to the FCA, all four firms are based in Cyprus. They failed to provide the clients involved with sufficient information regarding the nature of these investments, such as the risks involved. CFDs are high-risk investments that involve speculating the changes in prices of the assets involved. And it can result in substantial losses, as was the case with these investors.

Besides the failure to warn the investors, the brokers went ahead and pressured them to make substantial investments in highly leveraged CFDs, including bitcoin, forex, shares, and indices. They went as far as encouraging them to take loans for the investments.

The FCA also pointed out that the firms had failed to pay the money they owed the investors and had withheld important details of the fees involved.

The involved brands had previously been allowed to operate in the UK through the passporting method.  Passporting is a situation where a firm registered in the European Economic Area (EEA) is allowed to offer its goods and services in any other EEA state without having to seek additional authorization from that state.

This action marks the first time FCA has revoked passporting rights from a firm.

The UK regulatory body issued each of the four brokers with a first supervisory letter dated 28th May 2020, banning them from selling to any residents of the UK. Each was also required to close all open trading positions for UK residents by 4th June 2020 and liquidate the balances.

Here is a screenshot of the notice from FCA:

FCA notice

Action by the Cyprus Securities and Exchange Commission

The Cyprus watchdog also took action against the four forex brokers for using fake celebrity endorsements to promote their products in the UK. The regulatory firm issued a partial suspension of the Cyprus Investment Firm (CIF) License of the four firms.

Their licenses are suspended for a month. During this time, they are expected to take corrective measures within a set framework. Failure to comply with this will attract additional corrective measures from CySEC, and this includes the possibility of the withdrawal of their licenses.

The partial suspension involved the following restrictions:

  • Prohibition to provide investment services to new and existing clients in the UK.
  • A ban from providing investment services to new clients in general.
  • Prohibition to advertise investment services to current and potential customers either directly or through third parties.

According to CySEC, the four traders did not act honestly when approaching their target customers. In addition to misleading marketing communication, they also did not assess how suitable their products were to the specific client segments they were providing them to.

Here is a screenshot of the details of the CySEC board decision dated 1st June 2020 regarding all four brands.

CySEC board decisionIn a statement issued by Mark Steward, the Executive Director of Enforcement and Market Oversight of FCA, he appreciated CySEC’s action against the four firms. He said that FCA would continue with investigations into the matter.

Consob’s Concerns

This is not the first time these brands are in trouble. In December 2019, Italy’s regulatory body, CONSOB, banned Hoch capital limited from operating in the country.

Hoch capital limited, however, did not heed. It prompted CONSOB to take further action and blackout the trader’s website within the country.

Cosnob concernsIn December 2019, the Italian regulatory body also banned 24option from operating in the country after it failed to follow the directives issued to it by CySEC. This was in response to a report by CONSOB to CySEC.

The action was in response to Italian investors’ complaints about the firm concerning their marketing methods, unfair loss of capital, and excessive promotion of CFDs to rookie investors, among others.

The ban will remain in force until CySEC can provide clear evidence indicating that Rodeler Limited has corrected the issues reported by its Italian Clients.

Here is a screenshot of the press release by CONSOB regarding the matter.

Cosnob press releaseAccording to CONSOB, the two firms had also violated the EU directive concerning negative account protection. They also broke the rules by pressuring investors to deposit more money and used incentives, such as bonuses, to encourage overtrading.

Scam Forex Brokers Conclusion: Stay Safe and Alert

Thousands of people fall prey to online scammers and only get to know this when it’s too late. A slight show of interest will have them using all possible methods to squeeze as much capital as they can from you.

You can protect yourself by researching about the broker first before investing your money. Look for any signs that it is a scam. And know how to recover your funds in case you fall victim.