The CFTC issued an advisory warning investors of fraud regarding commodity trading systems and related consulting services sold on the Internet.
Commodity trading systems are based on tangible assets, like crude oil or precious metals. These high-risk systems employ computer programs that use mathematical formulas to alert users on when to buy and sell commodity futures (in which the buyer agrees to purchase or sell a quantity of a physical commodity at a specified future date) and options contracts (meant to facilitate a prospective transaction at a specified price and date).
Users should beware of commodity trading systems because promoters may present hypothetical or “real-time” trading results based on historical prices, giving the false impression of large net profits and inflating the real performance of a system. Thus, promoters can manufacture results and brush over hidden costs including broker fees, the leasing of a trading system itself, and other subscriptions. Not all promoters are required to be registered with the National Futures Association nor with the CFTC.
Blowing the Whistle on Commodity Trading Systems Fraud
- If an individual has specific, timely, and credible information regarding commodity trading systems fraud, whistleblowers may be eligible for rewards from the CFTC.
- In the past, the CFTC awarded nearly $200 million to a commodity trading systems fraud whistleblower, and has issued rewards based on over $3 billion in sanctions collected by fraudsters.
Whistleblowers seeking legal advice may contact Kohn, Kohn & Colapinto for a consultation.
