The National Futures Association has slapped the hands of Forex.com (Gain Capital) with a $100,000 penalty. Part of the charge is for ‘using deficient promotional material and failing to uphold high standards of commercial honor and just and equitable principles of trade …’. Specifically, if you look at page 3, section 12 of the official complaint, you see the NFA takes issue with the following statements:
Statements made by several of the firm’s sales solicitor were even more reckless, including:
‘… you have nothing to lose and everything to gain’, ‘just by taking the automated trading signals generated by FXSignal4 over the past 12 months you would have seen a staggering 637.8% return on your money’, and ‘for everyone trading with the program with only $10,000 in their account by the end of the year they generated $63,780 in total profits!’.
Companies, like people, respond to incentives, and I think a fine of this magnitude would be well outweighed by the additional sales and commissions from bringing fresh blood (new customers) through the door using such unscrupulous tactics. Also, while it’s encouraging to see such efforts to protect the public, retail fx brokers have been making these kinds of statements for as long as I can remember. I expect they will continue with such underhanded manipulations.