Forex investment firms claim to invest clients’ money in the forex market through managed accounts. This trend has obtained great fame, especially in the Hispanic market of different countries, offering its clients exorbitant monthly returns without any transparency and remunerating them for convincing other people to invest. It was the one of the biggest forex trading scams.
If you do an Internet search, you will realize all the controversy that exists with these companies and why so many investors and financial experts claim that it may be a forex pyramid scheme.
Different than other forex scams, there is a little possibility of money back in this type of case.
Next, we look at each of the characteristics described above in the section on pyramid companies to see if they apply in some way or another to such a Forex Finance company.
Does it apply yes or no? Yes. Forex Finance companies have offered investors a return of 10% to 50% per month! Based on the deep experience in the foreign exchange market and investment management, we know that this level of returns is almost impossible to obtain and impossible to sustain in any financial market, including forex.
There are investors who charge what they promised. Does it apply yes or no? Yes. We know of several people (including friends and family) who have invested or know someone who has and claim they have collected their promised returns. The problem is that many have not withdrawn their earnings and are guided by what their statements say.
Remuneration for referrals. Does it apply yes or no? Yes. The clients receive additional benefits when referred persons invest. The company also accesses a network of aggressive sales agents who apparently are not interested in the lack of transparency of the business or all the present characteristics of pyramid scams.
Lack of transparency. Does it apply yes or no? Yes. Investors cannot confirm whether their money is in the regulated broker that the company claims, nor do they know how their money is being managed. The clients basically send their money to a company that supposedly invests it with a regulated broker house. This scheme is not possible in the United States or other large countries because (by law) companies that are not regulated cannot take possession of their clients’ money. They can only manage it (but not withdraw or deposit), when the client deposits them in their own account at a regulated broker house.