The Commodities Futures Trading Commission (CFTC) has cited a binary option fraudster, a fraud which borrows many common tactics.
“The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge James I. Cohn of the U.S. District Court for the Southern District of Florida entered a Consent Order against CFTC Defendants Neil Pecker with a last-known address in Longwood, Florida and his company, Vision Financial Partners, LLC (Vision) of Deerfield Beach, who were charged with fraudulent solicitation and misappropriation in connection with off-exchange binary options.” A press release from the CFTC stated. “The Order, entered on March 9, 2017, requires Pecker and Vision, jointly and severally, to pay restitution to defrauded investors totaling $2,777,130 and a $3.75 million civil monetary penalty.”
According to the CFTC complaint, Pecker is guilty of some of the most common types of fraud in binary options: 1) claiming falsely to be properly registered.2) providing false and misleading statements about the prospects for success trading binary options 3) Using off-shore banks and refusing to give back client’s deposited funds.
Claiming falsely to be properly registered.
According to the order, while Pecker told prospective clients that he was “a licensed broker who was registered with the Securities and Exchange Commission end CFTC, and that Pecker had been trading binary options for 12 years,” the firm was unregistered and in violation of options trading regulations which required registration with the Financial Industry Regulatory Authority (FINRA), the complaint stated.
Providing false and misleading statements about the prospects for success trading binary options
The defendants made a series of misrepresentations including guaranteeing trading returns: “Defendants made various misrepresentations to clients regarding their likelihood of making money if they traded binary options through Defendants. Defendants also misrepresented that Pecker was very successful in trading derivatives. Defendants reinforced the misrepresentation that they were highly successful by guaranteeing a return on prospective clients’ investments.”
Misrepresenting the risk of binary options trading is a global phenomenon, a March 2016 expose from The Times of Israel quoted on binary option broker in that country as saying: “He had been instructed to present the binary option as an ‘investment’ and himself as a ‘broker,’ even though he knew they would most likely lose all their money. ‘The client isn’t actually buying anything. What he’s buying is a promise from our company that we will pay him. It’s gambling and we’re a bookie,’ he says now.”
Using off-shore banks and refusing to give back client’s deposited funds
According to CFTC’s complaint, Pecker didn’t disclose that a hyped-up program held money in overseas banks and forbade return of money until a minimum trade limit was reached.
“Defendants failed to tell prospective clients that they would be signing up for the off-shore trading firms’ ‘bonus’ programs, where the trading firm claimed it would provide a matching deposit amounting to a specified percentage of client funds, providing the client ‘extra trading leverage.’” The CFTC complaint stated. “The terms and conditions for this ‘deposit match’ provided that clients were prohibited from withdrawing funds from their trading account, including their own funds initially invested, unless and until the client traded at least 20 times the value of his or her trading account.”
Pecker is a repeat offender. In 2012, when he was head of another firm, LMC Asset Management, and the CFTC found that “From at least October 18, 20 I 0 to at least October 21, 2011, LMC solicited and accepted orders from clients who were not Eligible Contract Participants (‘ECPs’) 1 to engage in retail, leveraged foreign currency (‘forex’) transactions without being registered with the Commission. The LMC Consent Order held that LMC violated provisions of the Act, made findings of fact, and imposed a civil monetary penalty (‘CMP’) in the amount of $140,000.”