Russian police arrests forex broker fraudsters, while authorities mull more restrictions

mlawson71

Corporal
Messages
188
The police in Russia’s capital Moscow has arrested seven persons suspected of scamming more than 3000 Russian and foreign citizens out of more than RUB 497 million (USD 7.7 million). According to the police, the members of the organized criminal group were posing as brokers. They claimed they were employees of a financial services company and were offering brokerage services on the international forex market.

The police has confiscated working telephones, computers, bank cards, memory sticks and documents, while the prosecution has accused the arrested of fraud. It carries a maximum penalty of 10 years in prison.

The events are taking place against the background of the murky situation with the regulation of legitimate forex brokers in Russia and ongoing discussions on regulation.

Earlier this month representatives of the largest forex brokers in Russia criticized the current regulation. According to the Russian news agency RIA Novosti, during a round table organized by the self-regulatory organization CRFIN, they complained it was very restrictive and contained “gray norms” and “legal loopholes”. In their opinion any new amendments would make it practically impossible to start a legal forex brokerage, which would mean proliferation of the gray sector and infringement of the client interests. The forex brokers also commented that any amendments and introduction of further restrictions through “satellite laws” were wrong.

Such “satellite law” is the draft № 928614-6, amending several Russian federal laws, including that on the self-regulation of the financial markets. According to the Russian-language site Forex Magnates, one of the proposed amendments empowers the Bank of Russia to block the access to the websites of unlicensed forex brokers, with the help of Roskomnadzor (the Federal service for supervision of communications, information technology and mass media). Another proposal includes the dividing of the forex broker’s clients into three categories: professional, qualified and unqualified and banning doing business with unqualified forex traders altogether. There is also a proposal for the introduction of “flexible” leverage, defined by the Bank of Russia, depending on the qualifications of the traders. Currently the maximum leverage a forex broker can offer to its Russian clients is 1:50.

Source: smnweekly.com/2016/04/28/russian-police-arrests-forex-broker-fraudsters-while-authorities-mull-more-restrictions/

How do you manage to scam that many people as a broker (or posing as one anyway) before you get caught? I don't get it.
 

Pharaoh

Colonel
Messages
19,959
How do you manage to scam that many people as a broker (or posing as one anyway) before you get caught? I don't get it.

It's really very easy. You need a trading platform and a price feed. If you want to be semi-legal, you slip in vague Terms Of Service banning scalping, news trading, arbitrage, abusive practices, etc., while not defining these. That makes it easy to cancel profitable trades for "breaking the TOS". You then refuse to provide any info on how the terms were allegedly violated, since that would enable cheaters to find ways around the rules (ignoring the fact that legitimate traders might be wanting to find a way to trade profitably within the rules).

Next, sit back and let the bulk of new traders blow their accounts. Most do this, so you get to keep most or all of their deposits with no effort. For profitable traders just accuse them of violating rules and cancel most or all of their profitable trades.

For anyone wanting to withdraw, now's the time to demand the ID documents you should have collected before letting them deposit. Of course, documents may have to be submitted several times and verified in difficult and expensive ways (difficult and expensive for the client, not for you).

After at least 2 months of delays, claim the withdrawal has been sent, but don't send it. Claim it bounced back and ask the client to reconfirm all the payment info, provide more ID documentation, etc. Every now and then, stop replying until the client contacts the company at least 4 times.

By this point the majority will have given up getting what little is left of their initial deposit back. For those last few, especially the ones who complain publicly, finally send them back what's owed and brag about how good your company is about fixing problems the client created by providing incomplete and inaccurate information.
 

mlawson71

Corporal
Messages
188
It's really very easy. You need a trading platform and a price feed. If you want to be semi-legal, you slip in vague Terms Of Service banning scalping, news trading, arbitrage, abusive practices, etc., while not defining these. That makes it easy to cancel profitable trades for "breaking the TOS". You then refuse to provide any info on how the terms were allegedly violated, since that would enable cheaters to find ways around the rules (ignoring the fact that legitimate traders might be wanting to find a way to trade profitably within the rules).

Next, sit back and let the bulk of new traders blow their accounts. Most do this, so you get to keep most or all of their deposits with no effort. For profitable traders just accuse them of violating rules and cancel most or all of their profitable trades.

For anyone wanting to withdraw, now's the time to demand the ID documents you should have collected before letting them deposit. Of course, documents may have to be submitted several times and verified in difficult and expensive ways (difficult and expensive for the client, not for you).

After at least 2 months of delays, claim the withdrawal has been sent, but don't send it. Claim it bounced back and ask the client to reconfirm all the payment info, provide more ID documentation, etc. Every now and then, stop replying until the client contacts the company at least 4 times.

By this point the majority will have given up getting what little is left of their initial deposit back. For those last few, especially the ones who complain publicly, finally send them back what's owed and brag about how good your company is about fixing problems the client created by providing incomplete and inaccurate information.

I have experienced some of the things you describe, but thankfully not all of them. I was wondering how those Russians didn't get caught earlier, but what you are describing makes so much sense now. I suppose that people thought they were dealing with very obstructive bureaucrats, not outright scammers, and it took them time to realize the truth.
 

Pharaoh

Colonel
Messages
19,959
The sad part is all any broker has to do to rake in more scam profits is stall withdrawals for several months. That alone will make many clients give up.
 

RicardoYa

Recruit
Messages
2
Hello,
Can someone help me find the official Russian government list of licensed Russian Forex brokers?
 

Addam

Recruit
Messages
259
Yes, because of scammers Forex's reputation really suffers. Many are afraid to come here.
 

bigdolly

2nd Lieutenant
Messages
1,027
Forex doesn't exist in Russia only scammers which B-book traders or sometimes drawing fake charts, hunting stops etc. Better to trade with offshore but licensed and trusted brokers elsewhere.
 

TrapLok

Recruit
Messages
136
I think it is a good news and harsh actions must be taken against the fake brokerage and scammers in order to make Forex market a secure place to deal with. These kind of fake people are a great threat towards the viability of the Forex trading. What do you think about it, traders?
 
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