Traders snared in forex scam

Legalbrief Today

Two KZN women caught in a sophisticated online cryptocurrency and forex trading scam have appealed for other victims to come forward and lay criminal charges. The first woman, an advocate who asked not to be named, said she had lost more than R1m and was in serious debt after she opened an account with MGM-Markets, a UK-based online trading company. ‘I saw an MGM-Markets advert on Facebook and went to have a look at the site. I opened an account and within a day a broker contacted me. Weekend Argus reports that she traded for three months ‘and it seemed I was getting great returns’. When I asked to withdraw the first time, they let me withdraw a small amount. Then I invested more.’ When one of her trades started going down, her broker phoned and said they had given her R300 000 credit. ‘I made the money back and then when I wanted to withdraw the profit, it became difficult.’ She blocked the broker, opened a criminal case and reported the matter to Action Fraud. The second victim said she believed she had doubled her money within the first week but has since lost R100 000. Police spokesperson Lieutenant-Colonel Zwane confirmed two separate cases of fraud had been opened at different police stations and police would investigate.

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Compli-Serve carried out some further investigations on this crowd.

MGM Markets says it is owned and operated by Tube Global Marketing. The broker’s website features a UK phone number, but there is no mention of license or regulation. As the company is not present in the register of the UK’s Financial Conduct Authority (FCA), we can safely conclude that MGM Markets is not regulated anywhere.

As always, we must emphasize that lack of financial regulation brings together with it uncertainty regarding the most crucial aspect of a brokerage – the safety of clients’ funds. When dealing with unregulated brokers, traders are not protected as clients if something goes wrong. Furthermore, in many cases such brokerages simply stop answering your emails and calls and disappear with your hard-earned money.

That being said, it appears that MGM Markets has a pretty bad reputation – we checked a couple of forex sites and forums, and many traders complain they have been called and scammed by this brokerage.

Another worrisome sign regarding MGM Markets is that the broker’s website has not disclosed any essential trading parameters, such as the spreads, leverage provided, and even the trading platform it uses. Furthermore, the brokerage does not offer free demo accounts, so we can safely conclude that MGM Markets is not transparent at all regarding its services and pricing.