Checking Your Forex and Futures Broker for Fraud

Have you considered investing in managed futures or trading futures and commodities yourself? How about trading forex or including currencies in your managed futures portfolio? Futures and the forex market are among the largest markets in the world and therefore offer many opportunities for investors to diversify beyond stocks and mutual funds. Of course, if you are an investor, you want to find the investment company or fund manager that has the best track record of investment performance. Meanwhile, if you are a trader, you want the best forex or futures broker service but with the lowest commission. But one step that is often overlooked is researching the broker, investment firm, or money manager that you are doing business with and trust for your money. Cases like the Bernie Madoff Ponzi scheme fraud should teach us all to be very careful who our hard-earned money touches. It does not mean that you should simply walk away from investment opportunities and keep your money on a CD that generates next to nothing. That’s like not driving to work because there are other drivers on the road who can be a hazard. There are always risks when investing, like any other aspect of life. The question is what is the best way to deal with it?

The NFA BASIC database for background checks

In the US, futures markets (stock indices, commodities, bonds) and currency markets are regulated by the CFTC (US Commodity Futures Trading Commission) and the NFA (Association National Futures). So whether you’re investing or trading futures or forex, the best place to start doing background checks is the NFA’s BASIC database (http://www.nfa.futures.org/basicnet). Almost all people and companies, current and past, that have been involved with the industry of the future have records in the BASIC database of the NFA, freely accessible to the investing public. When we at MarketHEIST review and approve investment brokers, advisers and services for use by our readers, our primary objective is to protect them from any fraudulent or illegitimate investment services. We have found that the BASIC database is the best place to start researching any person or company involved in futures or forex.

The information is very comprehensive, with CFTC records dating back to 1975, NFA records from 1982, and information on all future US exchanges from at least January. 1990. BASIC is very easy to use. Simply type in the name of the company / firm, the NFA membership ID, or the person’s name. You will find the full name of the company or person and business information, current and past registration, the record they have to know what business they are authorized to do and any cases against them and what the court rulings are. There are records and disciplinary history of more than 150,000 people and 10,000 companies involved in the futures industry.

Of course, there are legitimate traders, often sole traders, who are doing well and are not registered. However, many may have had licenses and registrations in the past, but may have allowed them to expire to give them more freedom in their operations. So, use your common sense and look at any questionable stories or activities that someone has been involved in. If you are serious about handing over your money to someone, or at least letting a broker keep the money while you trade, you owe it to yourself to follow up on any questionable history until you are calm.