Belgium’s Financial Services and Markets Authority (FSMA) today issued a warning against the unauthorized activities of Finiko, which allegedly made false claims to garner business for its trading robots.
Finiko offers Expert Advisors (EAs) which are typically used to automate trading in CFDs, forex and cryptocurrency derivatives. The FSMA said the app provider fraudulently solicited Belgian consumers to purchase its trading system by misrepresenting the software’s effectiveness.
The notice also accuses that Finiko also encouraged those who bought the EA to promote it. They offered attractive commissions and incentives to onboard more users to invest through their app.
The regulator further explains that Finiko operates a multi-level marketing network where members were offered a reward for buying the robots and attracting more users. The platform pays its affiliate members commissions for introducing others to purchase its EAs.
As such, Finiko broke FSMA regulations against distribution of CFDs, forex, crypto-derivatives and other investment products that are prohibited in Belgium.
“Such MLM networks appear to be active on social media via countless (private) groups. It appears that these schemes mainly target young people. The message is that everyone can afford a luxurious lifestyle provided they bring in enough new members and make the appropriate investment in the software being promoted,” the FSMA said.
The case highlight regulators’ concerns about the risks posed by trading systems and advisory services sold on the internet.
Separately, Belgium’s financial watchdog warned against multiple boiler and recovery rooms that are offering investments in the country without complying with Belgian financial legislation.
The authority defines ‘boiler rooms’ as a type of fraud that involves contacting customers unsolicited, often by telephone, offering to sell them little-known shares or exotic financial products. Although the boiler rooms often claim to be an authorized service provider with a professional website and forms to fill out, they are in reality swindlers who offer fictitious or worthless investments.
Based on this, the FSMA strongly advises against responding to any offers of financial or recovery services made by these companies or transferring money to any payment details they might mention.
FSMA operates as a watchdog for financial trading, securities and markets in Belgium, overseeing a variety of assets and compliance issues for traders.