Whether you’re just starting out in the stock market, or you’ve been investing for years, you should be aware of the scams that can take advantage of you. The first thing you should do is to look for a broker that is legitimate and has a good reputation in the financial world. Once you find one, you’ll want to make sure you understand the contract and how to avoid getting ripped off.

Legal action

Several CFTC enforcement actions have recently taken place. These include the filing of a complaint against the Forex broker TIRN and the filing of a complaint against a fictitious Forex exchange, Mirror Trading.

In the case of TIRN, operators claimed to have developed a crypto-trading system that could generate high yield returns of 9% to 22%. The CFTC found that TIRN actually operated a crypto Ponzi scheme, misappropriating more than US$15 million.

The CFTC has also charged a group of advisers with conducting a scheme to defraud customers. The advisers allegedly entered prearranged trades with customers on the MidAmerica Exchange. They received commissions from these trades and allocated the profitable sides to customers with declining equity. They also received “wash sales” orders that had no effect on customers.

Forex bucket shops

Historically, bucket shops were companies that offered margin trading schemes without actually making any margin loans to their clients. Bucket shops were also called bookies and stock jobbers. They specialized in stocks in the 1870s and 1890s and primarily dealt with commodity futures in the 1920s.

Bucket shops also operated a dealing desk. They would mix trade tickets with their clients and allocate winning trades to their clients. They would also have a practice of misquoting.

During the early 1900s, bucket shops came under increasing legal attack. Their access to trading information was gradually restricted by stock exchanges. Eventually, bucket shops were deemed illegal.

Bucket shops were eventually banned in the United States. However, they still exist. Many are illegal in many countries. They are also considered a type of fraud.