The Federal Government is being urged to ban a highly speculative investment scheme that has been hijacked by international fraudsters to steal millions of dollars from Australians. The following report has been published by ABC Political Reporter’s Matthew Doran and Henry Belot.
So-called “binary options trading” allows investors to speculate on whether a stock or commodity price will go up or down. A form of fixed-odds betting, such trading sees investors cash in — or lose everything.
Many established traders consider the investments too risky but naive amateurs are being aggressively sold the products by scammers promising huge returns.
Fraudsters in countries with few financial regulations are using gambling industry tactics and cold calls to pressure Australians into sending them money, which they falsely claim to invest on their behalf.
Some Australians have lost more than $1 million to these scams, alleging the money was never invested or dividends were not returned and they were persuaded to continue sending funds despite huge losses.
Binary options trading is legal in Australia, but the scale of fraud overseas has prompted Israel and Belgium to introduce bans.
Canada is pursuing a nationwide ban and the UK and European regulators are considering similar measures.
These scams are relatively new to Australia and the consumer watchdog is warning $7.5 million has already been lost, with ACCC deputy Delia Rickard saying that’s just “the tip of the iceberg”.
“If you’ve lost a significant amount of money, the sad news is you’re very unlikely to get it back,” she said.
The predatory tactics are worrying the Australian Security and Investment Commission (ASIC), which has forced Google and Facebook to stop promoting smart-phone apps run by unregistered traders.
Legitimate traders registered with ASIC are also concerned, with one chief executive telling the ABC he would support a “a complete prohibition” of simple binary options trading.
“We support any steps ASIC decides to make in addressing this unsatisfactory situation,” he said.
Source: ABC News, political reporters Matthew Doran and Henry Belot.