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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

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  • BARNES, PAUL

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.

Suggested Citation

  • 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 e," MPRA Paper 85061, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:85061
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    File URL: https://mpra.ub.uni-muenchen.de/85061/1/MPRA_paper_85016.pdf
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    References listed on IDEAS

    as
    1. Barnes, Paul, 2010. "Insider dealing and market abuse: the UKs record on enforcement," MPRA Paper 25585, University Library of Munich, Germany.
    2. Paul Barnes, 2010. "Stock market efficiency, insider dealing and market abuse: the UK experience," International Journal of Business Governance and Ethics, Inderscience Enterprises Ltd, vol. 5(1/2), pages 38-50.
    3. barnes, paul, 2016. "Stock market scams, shell companies, penny shares, boiler rooms and cold calling: the UK experience," MPRA Paper 71562, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Barnes, Paul, 2021. "The use of contracts for difference (‘CFD’) spread bets and binary options (‘forbin’) to trade foreign exchange (‘forex’) commodities, and stocks and shares in volatile financial markets," MPRA Paper 105580, University Library of Munich, Germany, revised 28 Jan 2021.
    2. Golnaz Shahtahmassebi & Lascelles Wright, 2021. "Profit and loss manipulations by online trading brokers," Papers 2107.14055, arXiv.org.

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    6. barnes, paul, 2016. "Stock market scams, shell companies, penny shares, boiler rooms and cold calling: the UK experience," MPRA Paper 71562, University Library of Munich, Germany.

    More about this item

    Keywords

    Stocks; shares; securities; contracts for difference; CFD; spread betting; binary options; forex; forbin; scam; fraud.;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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