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How to deal with fake FOREX broker? Consumer Fraud

Discussion in 'Banking, Finance, Investments' started by Sergei, Nov 6, 2019.

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  1. Sergei

    Sergei Law Topic Starter New Member

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    Jurisdiction:
    Ontario
    I have been working with a company that presented itself as a FOREX broker based in Toronto. I was cautious because company looked somewhat obscure, but everything looked normal for quite a while. Company suggested that I'd hire a broker to manage my account and I was stupid enough to agree. Yet everything still worked pretty much normal for several month.

    Then one day I saw one very strange trade that was completely mismatching real FOREX market. I got suspicious and decided to pull my money out. By that moment I had about 40k USD profit. I tried to contact my broker to stop all the trade, but it was not available over either phone or e-mail. I e-mailed company asking to reset trading password, but e-mail was ingored. Then I asked for 30k out. This request was also not executed and the next day my account lost 20k USD to trade. After this happened company informed me that they can't handle my withdrawal request. There was still enough equity on account, but some of it was margin for ongoing trades and I wasn't able to stop these.

    On that day I made many frantic attempts to reset password for my account. I e-mailed company, sent messages via special web-interface dedicated for such requests, even phoned to customer support. All requests were ignored. Customer agreement explicitly says that company shall act immediately if customer reports that he might've lost control over account, but all my calls were just ignored for another day. Finally, a man from customer support called me and told me that I need to fill a special form to do password reset. The form that he sent to me included pretty normal formal confirmation of my identity and a weird paragraph where I said that I guarantee that I have no claims against company, and company completed all its obligations under client agreement. I refused to sign that one and sent an e-mail that included signed form without this paragraph. I was immediately told that I must sign an entire document, including this paragraph. I refused again and demanded for immediate password reset.

    Meanwhile, trading kept going awfully wrong. When I was arguing with a company about password reset my account still had about 20-25k in it. On a next hour it went down to 4k, then 0. Soon afterwards I got an e-mail that my password has been reset.

    Afterwards I started digging in company-provided data and soon found that plenty of company prices looked fake (selling well below market for days, buying well above etc.). I lost about 20k USD in last day of a trading compared to same trades executed on market prices (using worst possible prices for a day). However it did not affected all the trades. Some trades looked normal too and I did lose money on such trades too, so I can't say that company took all my money with such trades.

    Overall I lost 20k invested in this fraud and I'm looking for a ways to get at least some of these back. Any suggestions? Maybe some advice for a company that could take a case like this?
     
  2. adjusterjack

    adjusterjack Super Moderator

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    File a complaint with the Ontario Securities Commission:

    Ontario Securities Commission

    Or hire a lawyer and file a lawsuit. Google securities attorney for your city.

    Or do both.
     
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  3. Tax Counsel

    Tax Counsel Well-Known Member

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    It appears that the firm you are dealing with is in Canada and thus it is likely that Canadian law would apply to this and that you would need to sue in a Canadian court if you have good claim to bring. This site focuses on legal matters in the U.S. so you are not likely to get much help here. Look for a site that deals with Canadian legal issues.
     
  4. army judge

    army judge Super Moderator

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    You appear to be posting from RUSSIA seeking information about doing business with a company in Canada.

    Trading forex (currencies) in international markets is popular among residents in Canada. Before any fx broker in Canada can accept forex and CFD traders as clients, they must become authorised by the Investment Industry Regulatory Organization of Canada (IIROC), which is the financial regulatory body in Canada. IIROC's website is:

    www.iiroc.ca


    You might discuss your concerns with a Russian lawyer or Russkie regulatory authorities.


    This website operates in the USA, which means we are of no value to you.


    To identify if a forex broker is regulated as Dealer Member by IIROC, the first step is to identify the registered name from the disclosure text at the bottom of the broker's homepage. For example, here's the key disclosure text from OANDA's website:

    OANDA (Canada) Corporation ULC is regulated by the Investment Industry Regulatory Organization of Canada (IIROC), which includes IIROC's online advisor check database (IIROC AdvisorReport), and customer accounts are protected by the Canadian Investor Protection Fund within specified limits.
    Next, look up the firm name on the Dealer Member section or AdvisorReport module of the IIROC website. Here is the official page for OANDA and results are also available on the CSA's website website which shows each province that the broker can operate in Canada.

    "There is a very high degree of risk involved in trading securities. With respect to margin-based foreign exchange trading, off-exchange derivatives, and cryptocurrencies, there is considerable exposure to risk, including but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or related instrument. It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable, or that they will not result in losses."
     
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  5. Sergei

    Sergei Law Topic Starter New Member

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    adjusterjack, Tax Counsel, army judge - thank you for your answers.

    Yes, my Client Agreement says that the company operates in Canadian jurisdiction and have a provision that any legal action can be taken only in Canadian court. And yes, I'm a citizen of Russian Federation, so for me it is somewhat difficult to find a lawyer in Toronto. I used Lawyer and Paralegal Directory from Law Society of Ontario to look for one and tried to contact them over e-mail, but got no responses so far. So I resorted to forums as alternative options for lawyer search and getting some legal advice with legal system that is unfamiliar to me.

    I checked for Canadian legal forums, but it looked that US forums provide much better service. I got optimistic when I saw that Ontario was on a Jurisdiction list. Sorry guys if I wasted your time.

    Checking IIROC is a great advice. Sadly it looks that GlobalFX is not a IIROC member (well, that was pretty expected situation, I'm a fool here).

    Contacting Ontario Securities Commission also sounds to be a good advice.

    I'll keep looking for Toronto lawyer.

    Thanks again for all the replies!
     
  6. army judge

    army judge Super Moderator

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    You're welcome.
    It can't hurt to talk to a lawyer in Russia.
    He/she might know of some remedies available to Russian citizens through a treaty or other legal arrangement with the Canadian government.

    It might also behoove you to visit the Canadian Embassy or a Canadian Consulate to report the unlicensed business, because a Canadian official might also have information that could help you.

    Governments, all governments, have treaties and/or arrangements with (or between) other governments that aren't necessarily known by the general public.

    Its worth investigating because you might discover something that could be very helpful to you.
     
  7. flyingron

    flyingron Well-Known Member

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    I doubt any of the regulatory bodies are going to help you. I suspect that this is a scam and the brokerage doesn't really exist under any regulatory agency. This is what happens when you step out of things that can be validated with your countries regulator. There's no earthly good reason to use a FOREX broker in another country.
     
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  8. Sergei

    Sergei Law Topic Starter New Member

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    I'm pretty sure that this is a scam. A very well organized one, existing for a long time, a lot of money involved. The whole point of my question is what I can do with this, given the fact that it's a scam and it's a company registered in Canada. Can I sue this organization and close it? Can I close their website and have domain name revoked, at least? I know that my actions were stupid and I learned my lesson to check for licence, but I expected that western law can do with scam company at least that much.

    As for my reasons for going for Canadian company services - it's difficult to find a FOREX broker in Russia. I searched for one for a long time before resorting to foreign services.
     
  9. flyingron

    flyingron Well-Known Member

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    Again, THIS IS NOT A FORUM FOR CANADIAN LAW.

    Second, even though the company "appears" to be in Canada, unless you can identify the entity precisely (and if it's a fake, you'd need to know the people involved), you're going to find it near impossible to take legal action.
     
  10. Sergei

    Sergei Law Topic Starter New Member

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    Companies have assets. A domain name in this case is a pretty good asset. Are you saying that it's near impossible to identify domain name owner & take a legal action against it?

    In Russian law practice the typical way to get away from responsibility in fraud cases is by using a short-lived company. You take legal action, it takes time to complete, meanwhile company goes bankrupt and you get nothing. But you CAN take that legal action and it'll end in your favor. Are you saying that in Canadian law (or US law, that I believe is not so dramatically different with that respect) it's pretty much impossible to do anything at least on that level? That you can do pretty much any kind of fraud and get away with it?
     
  11. flyingron

    flyingron Well-Known Member

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    A domain name is a pretty lousy asset. First off, you won't get control over it without a lot of legal expense. First, you'd have to win a court judgement that declared you the owner of it, then you'd have to fight ICANN (this is another $3000 minimum to file) to get it transferred.

    If they did it right, the ownership of the domain is a sham as well.

    You are wrong, Canada law is substantially different than US law. But again, unless you can find the actual entity involved, you're going to have a hard time bringing legal action against anybody in any court.
     
  12. Sergei

    Sergei Law Topic Starter New Member

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    Well, my idea is not to take control of a domain name, but rather a) identify its owner and b) take that domain name down. If you can prove that someone (doesn't really matter who particularly) uses some domain name for doing fraud, won't it be possible to ask for a DNS provider to take it down?
     
  13. Zigner

    Zigner Well-Known Member

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    You believe wrong. This forum handles UNITED STATES law matters only. You are not in the U.S., and your matter has nothing to do with the U.S. This is not the right place for you to look for information.
     
  14. adjusterjack

    adjusterjack Super Moderator

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    Anything is possible. Even pigs can fly if you put them on an airplane. Just trying to point out that "what if" questions don't help you. The way to get a lawyer is to call up and make an appointment. Then don't respond to emails.

    You're in Russia, the scammer might or might not be in Canada. Start with a lawyer in Russia.

    I don't see any value in continuing this discussion so I'm closing the thread.
     
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