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Recent developments in investment fraud and scams: Contracts for Difference (‘CFD’) spread betting and binary options and foreign exchange (‘Forex’) sometimes collectively known as ‘forbin’ – the UK experience.

BARNES, PAUL (2018): Recent developments in investment fraud and scams: Contracts for Difference (‘CFD’) spread betting and binary options and foreign exchange (‘Forex’) sometimes collectively known as ‘forbin’ – the UK experience.

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Abstract

This paper discusses investor trading schemes for CFDs, spread betting, binary options and forex, what are effectively financial derivatives, designed for investors to speculate on market movements. It is argued that it is not possible for investors to consistently ‘beat the market’ unless they have inside information and frequent trading will result in losses. It is also shown how these derivatives are used in scams and frauds designed to dupe naïve investors. The final section of the paper examines how the UK regulators, principally the Financial Services Authority (later the Financial Conduct Authority) have attempted to combat fraud and abuse and their prosecuting and preventative efforts.

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