Financial conduct regulator warns public about forex-trading charlatans

Recent warnings and prosecutions have shone a light on the shady world of foreign-exchange-trading con artists.

Charlatans dangling carrots of unbelievable returns for trading foreign exchange (forex) on your behalf have been thrust into the spotlight by the Financial Services Conduct Authority (FSCA), which has warned the public to be careful.
The FSCA has issued a public warning about unscrupulous con artists masquerading as legitimate forex traders and released information about the prosecution of two con men who posed as forex traders in separate scams.
In the first, the regulator warned the public to stay away from Money Moves Forex and Prophet Moral Monareng. Money Moves and Prophet Moral Monareng have been advertising their services on social media using a legitimate financial services provider (FSP) number, 48809, belonging to Lebone Risk Solutions.
The FSCA warned that both Money Moves Forex and Prophet Moral Monareng are not associated with Lebone, despite their claims, and that neither is authorized to provide any financial services or give advice in terms of the Financial Advisory and Intermediary Services (Fais) Act.
Last week the FSCA reported the conviction of Port Elizabeth-based David Wilmot, who, through his company Nava Shore Holdings, took funds from clients under the guise that he would trade forex on their behalf.
The FSCA says Wilmot “infiltrated” a local church and exploited relationships within the church to misappropriate most of his clients’ funds. In 2013, the FSCA warned the public about Wilmot, advising that he was not an authorized financial services provider (FSP) or a representative of one. He has since been convicted for money laundering.
The regulator also reported the conviction and sentence of Jabulani “Cashflow” Ngcobo and Mzabalazo Welcome Dlamini, who also misrepresented themselves as authorized FSPs who could trade forex on behalf of their clients, which is a criminal offense.
The pair were sentenced to six years imprisonment, two of which were suspended, and a fine of R200,000 wholly suspended for five years.
Legitimate forex trading versus scammers
Legitimate foreign exchange traders trade currencies on the belief that one currency will weaken or strengthen relative to another.
Faizan Anees, the co-founder of broker SA, says consumers need to be careful not to be lured by the marketing tricks used by people posing as forex traders.
As an investor, you should ask yourself why some stranger would want to make you ultra-rich, he says. Successful forex traders are unlikely to share their hard-earned tips and tricks with Joe Public.
To protect yourself from being scammed, he says you can check that the broker or bank they’re trading with is reputable, whether the company is regulated and how long it has been in business, and you can ask to see trading statements.
Ask to see signed and certified statements from the broker and check if the broker is regulated.
Anees says you should be careful of people who try to put you under pressure. “If the opportunity will expire and never return, beware!”
He advises that you begin by investing only a small amount. “A trader that has a profitable strategy can perform with small and large funds, so there should not be any rush to invest everything. Plus, only commit money that you can afford to lose.”
Forex and gambling: would you gamble with your retirement?
A top financial planner says you shouldn't even be considering forex trading if you’re not an appropriately qualified and experienced trader.
It is similar to gambling and should be avoided unless you are among the few South Africans whose financial planning affairs are in order, says Craig Gradidge, who holds the certified financial planner qualification and is a director of Gradidge-Mahura Investments, a financial planning practice approved by the Financial Planning Institute.
Your financial affairs are “in order” when you have enough saved to cover your retirement, your children’s education, your emergency fund, and your lifestyle, says Gradidge.
Then, and only then, should you consider forex trading, “and only as an alternative to gambling”, he says.
“The random outcomes in forex trading are similar to that of betting on black or red on the roulette table. There’s a one-in-36 chance that the green could come up in roulette, so perhaps forex is slightly less risky, as the currency could go up or down.”
However, given how few South Africans can afford to retire and maintain their standard of living and our high level of exposure to debt, there are very few people who can safely dabble in forex trading.
The people who make money from forex trading are often those who sell training programs or offer forex trading platforms, Gradidge says. While it is not impossible for the average person to make money from trading forex, the odds are stacked against you, he says.
Outrageous promises
Gradidge says he has seen scams offering a guarantee to double your money in 30 days. He says if such returns were possible and you could invest R100,000, and re-invest it and the returns every month, your investment would grow to R3.6bn after two years and R1.7-trillion in under four years.
Such guarantees are meaningless and aimed at getting you to part with your money. “You are the source of their ‘return’,” he says.
The FSCA also urges you to do due diligence on a financial service provider before parting with your money and partaking in any financial-related business.
Check with the FSCA that the person or company is registered and authorized to offer services, products or financial advice on the regulator's toll-free number or website.
Some charlatans misrepresent their FSP status, either by using a false FSP number or by claiming to be linked to or associated with, a legitimate FSP. You can uncover this by checking with the FSCA.


  1. Great post on forex exchange. Thank you so much to share this kind of concepts. Visit here : Oracle Financial Group


Post a Comment