Can you be scammed by a regulated broker?

As a consumer, when you see that something is ‘regulated’ it usually instils a sense of authority and trust. More often than not, when dealing with any financial matters, being ‘regulated’ in some way is enough to make people comfortable in the advice being given, and, for some people at least, even give them enough confidence to part with their hard earned cash. Unfortunately, in line with the continuous and seemingly uncontrollable rise in online scams, there are an increasing number of fraudsters who are hiding behind the assumed trust of ‘regulation’ in order to con people out of their money.

What is a regulated broker?

Regulated brokers are brokers who are registered with and regulated by some form of financial regulatory body. When they register and sign up to being regulated, their financial affairs and activities are then monitored by the body they have signed up to be a part of, with the regulatory body taking responsibility for preventing any fraudulent activity that its members may attempt or undertake. With this being the case, it’s easy to see why most people would assume that they’re in safe hands with a regulated broker.

How do they scam you?

Unfortunately, there are various things that could make a broker untrustworthy or an outright scammer, regardless of their regulated status. The two main ways that this can happen are:

1) criminals pose as a regulated broker firm in order to gain trust with their victims. In this instance, when you look up the broker they appear to be legitimate because the real firm actually are. The person you’re dealing with, however, is not part of the company and is posing as them and using their legitimate registration number with the financial governing body. These fraudsters will then convince people to invest in forex funds that are non-existent, and users money then disappears along with the point of contact.

2) where the regulatory body is not based in the UK, it can sometimes be easier for unscrupulous broker activity to go unnoticed for long enough for them to scam people out of significant amounts of money. By the time they are caught up with and closed down, it is then too late and money is gone. There are various locations where brokers could be based, many choose to base themselves in countries in the EU where there are lower business operational costs and better prospects of being accepted by the local regulatory bodies. In this instance, brokers tend to start out legitimate in order to gain regulatory registration, and then move on to fraudulent activities shortly after being accepted and before they’re subjected to many checks.

What can I do if I fall victim to a regulated broker scam?

If you have lost money to a regulated broker and feel that you may have been scammed, there are a number of ways that you may be able to recover your money. The first step should be to contact a specialist investment fraud lawyer with experience in regulated broker recoveries to assess the situation and provide you with expert advice on next steps available to you.