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How to Report a Forex Broker

How to report a Forex Broker



Forex is an exchange which allows investors to trade a wide variety of currencies through foreign exchange. The forex market is the largest financial market in the world, with more than $5 trillion being traded daily.



There are investors who see high returns each month but to become a successful investor, it takes excellent understanding of the market along with great experience and knowledge to start seeing a return on investment.

Success in forex trading is not something that happens overnight, and a lot of new investors go into it thinking that they can make quick profits, only to find that it is a volatile environment that can be merciless to those who are not prepared.

Apart from risks involved with trading activities, investors are also faced with another major risk; the risk of being scammed by fraudulent forex brokers. A lot of investors who have been scammed may not know what to do, or what the process is to attempt to get their funds back.



For this purpose, this article explores a variety of topics from the importance of regulation right down to what investors who suspect they have been scammed can do, and how they can go about reporting a forex broker.


Why is regulation important in Forex Trading?

Regulation in forex trading is crucial as result of the amounts of money that passes through the market daily. This makes it attractive for a variety of scammers and malicious individuals known as “white collar criminals” to pervade the forex market, looking for their next unsuspecting victim.

These criminals have found a variety of easy ways to con especially new investors as well as active traders by forming what would appear to be brokerage firms, luring investors into depositing their funds, and finding ways to get away with these funds and avoiding being caught.

These scam operations are being run by faking regulatory status, cloning websites of genuine, legitimate brokers, and even going to great lengths to use the holistic trading process against unsuspecting investors.

To ensure that only legitimate brokers provide financial and trading services and solutions, forex regulators have instituted a variety of means to ensure that investors are not robbed by these illegitimate scammers.

However, despite the preventative measures in place, it remains the responsibility of the investor to ensure that they research a broker and their claim to regulation before dealing with them.


What do Forex Regulators do?

Forex Regulators have a variety of responsibilities, including but not limited to the following.

  • They license and supervise brokers. The process involved with licensing is stringent and it also involves ensuring that people who have specific industry qualifications can hold top positions in these firms.
  • Ensuring that regulated and licensed brokers comply with the segregation of trading funds. Segregation refers to a practice where client funds are kept in bank accounts that are separate from the operational account of the broker.
  • Ensuring that there is compliance with reporting standards. Legitimate and regulated forex brokers must submit periodic reports on their activities along with trade data of their clients. This information is subjected to strict scrutiny and monitoring by forex regulatory entities.
  • The enforcement of sanctions should there be market infractions. Where and when there are clear cases of fraudulent practices, forex regulatory entities are empowered by law to carry out a variety of enforcement activities against these suspected fraudulent brokers.


The focus behind regulation in the forex market is to preserve the sanctity of the markets in addition to boosting investor confidence. This is achieved by ensuring that there is a level playing field for all participants in the forex market, regardless of their investment size.

The need for regulation in forex trading is reinforced by the fact that brokers who provide liquidity for retail investors, take opposite positions to the trades placed by their clients, such in the case where Market Maker brokers are concerned. In instances such as these, forex regulators must ensure that investors are not deliberately subjected to conditions which may tilt the forex market against them.

Based on the information provided above, it can be deduced that forex regulation pertains to the protection of investors. Forex brokers who are regulated by important, reputable regulators are less likely to cheat their clients. Where there are infractions, regulators are empowered by respective laws of their respective jurisdictions to apply the relevant sanctions.

Some of the most important regulators in the forex industry includes, but is not limited to:

  • The Australian Securities and Investment Commission (ASIC in Australia).
  • The Bundesanstalt für Finanzdienstleistungsaufsicht (BaFIN in Germany).
  • Commodities and Futures Trading Commission (CFTC in the United States).
  • Cyprus Securities and Exchange Commission (CySEC in Cyprus).
  • Financial Conduct Authority (FCA in the United Kingdom.
  • Financial Sector Conduct Authority (FSCA in South Africa), and several others.


How to spot a Forex Scam?

Forex trading is a legit activity where investors can earn great profits, however, as result of the number of scammers and illegitimate brokers out there, a lot of people may associate forex trading with a scam. It is therefore imperative to educate more investors on what they must look for in a broker before they invest funds in addition to informing investors on how they can spot a scam.

One of the hardest tasks for new and aspiring investors to overcome is the vast, endless amount of misinformation that exists, bad actors, and black-listed scam brokers that try to take advantage of vulnerable and unsuspecting participants in the market.

Before deciding on a forex broker, it is imperative to conduct thorough research on the broker to ensure that they are legitimate. Some key points that investors can look at when reviewing and evaluating a broker are discussed below.


Broker’s Regulation

The first obvious red flag to look for is regulation, or the lack thereof. Brokers who do not have regulation to provide services do not have a watchdog ensuring that they operate and ensure the safety of client funds.

Even when a broker claims to have regulation with certain entities, it is imperative to ensure that this is true by visiting the regulatory entity’s website and to view their list of regulated brokers. It is also imperative to see whether the broker is not blacklisted on websites or whether it has bad reviews against it.


Broker’s Leverage

Leverage is a useful tool that is provided by brokers, allowing investors open larger positions, and maximizing their profit potential. However, leverage can also lead to significant losses that may exceed the initial deposit of the investor.

In some cases, the investor’s account balance can go into a negative if their account does not have negative balance protection applied.

There are some brokers who are prohibited from providing leverage above certain ratio levels. For instance, in the United Kingdom, under FCA regulation and ESMA requirements, EU clients are provided with a maximum leverage of 1:30 as result of the risks associated with it.

In other jurisdictions, brokers may offer higher leverage ratios, some offering more than 1:2000. Investors are warned to tread lightly where such brokers are concerned as such ratio levels are extreme and may lead to substantial losses. Investors are advised to check all other points in addition to the leverage.


Undisclosed Parameters

Brokers who do not provide investors with transparent fee schedules and trading conditions should not be considered as there may be hidden fees and costs involved. Legitimate brokers will always provide investors with all costs, both trading and non-trading fees upfront.


Withdrawal Rules

Another crucial factor to consider when evaluating brokers is the ease with which investors can deposit and withdraw their funds. This is another factor where regulation plays a key part as regulated brokers, due to keeping client funds separate, must ensure that client funds are available for withdrawal at any given time.

In addition, the broker must be able to provide their withdrawal rules clearly and there should not be any discrepancies or inconsistencies with their withdrawal processes, limitations, restrictions, or any other factors.



Spreads form part of trading fees and thus, all information regarding spreads and commissions must be information that is freely available without investors having to commit to a live trading account first.


How to report a forex broker

Financial Ombudsman

There are some regulatory entities that will not act before investors have first contacted the financial ombudsman as they are the mediator between the investor and the broker.

It is imperative for investors to understand the reporting line in their specific country of residence to ensure that their complaint is tended to.


Reporting the broker to a regulatory entity

One thing to remember is that investors can report bad business practices of brokers in addition to reporting scam brokers, or suspected scam brokers. To prevent trading with a scam broker in the first place, it is crucial that investors ensure they use the services of legit brokers.

In most cases, a broker may seem legit and there may not be any red flags. That is, until the investor tries to withdraw their funds.

The first step to report a forex broker will involve collecting evidence, which may consist of correspondence with the broker, screenshots, and/or other forms that will show proof that the forex broker may be illegitimate, scam, or that they may be guilty of poor practices.

The next will be to take the evidence and information and reporting it to the regulatory entity in the relevant jurisdiction in which the investor resides, and where the broker is subsequently authorised, licensed, and regulated to provide its services.

Where the broker is not regulated by an entity in a certain country, things may be a bit more difficult as there is no watchdog. However, if a fraudulent broker claims to have regulation, it can still be reported to the regulatory entity whose regulation the scam broker is pretending to hold.

If the broker claims to have, or has, regulation with more than one entity, a complaint must be filed with each. These complaint forms may require some information from the investor who is reporting, including, but not limited to:

  • Email Address
  • First and Last Name
  • Name of the Broker
  • How the investor found this broker
  • Amount the investor deposited or lost
  • Transfer method that they used – whether bank transfer, credit card, or electronic payment.
  • A description of what happened.
  • Uploads of proof or evidence including a URL to the broker’s website.


Apart from reporting the broker directly to the regulatory entities that govern a certain jurisdiction, investors can also make use of websites that are specifically designed for reporting forex scams.

Websites such as these also help to spread the word about certain brokers and can help other investors from falling prey to such fraudulent brokers.

The process involved with reporting brokers, from when the complaint is submitted up until when action is taken can depend on the processes followed.

The regulatory entity of each jurisdiction has their own processes to follow, and they conduct their own investigations, this may take some time to complete. It is imperative for investors to conduct follow-ups if they are not automatically contacted.

Unfortunately, where unregulated offshore brokers are concerned, there are no guarantees that investors will be able to have their funds returned as result of the lack of regulation.


Taking things to court

This may be a step in the process when reporting a broker and it may involve more than one investor depending on the depth and number of complaints received, and especially if the broker is in possession of client funds that it refuses to return to investors.

It is always best to resolve all complaints in preceding steps but going to court may be something that cannot always be avoided, with it being the very last step in the process to ensure that the guilty party or parties are punished for their actions, especially when considering that there are malicious actors behind these scams.


Popular forex scams and how to avoid them

Automated trading programs, EAs, Robots

There are many innovative, helpful tools when trading forex to help investors add a competitive edge to their trading and automated trading, expert advisors, and trading robots are just some of them. However, as innovative, and helpful as they may be, they are one of the easiest ways that people get scammed by frauds on the internet.

It is imperative that investors be wary of unrealistic promises that are made by sellers of these tools. There is no sure or guaranteed way to make profit on the forex market and there is no perfect, fail-proof automated system, or a genuine robot that will provide you with real market figures accurately.

Robots that promise significant percentage of profits are one of the immediate, certain red flags to look out for. Some robots may use the scalping scheme to try and make little profits and thus they boast with a good win rate. This may make the investor think that it is an efficient software tool, however, with the smallest shift in market conditions, all profits may be lost.

Investors who use robots such as these will notice wider commissions and spreads that will affect their profits. For this reason, investors must evaluate the trading tools that they use which are not provided directly by a legit, regulated broker or software developer.


Signal Sellers

Social trading is an exciting aspect of forex trading, but it can be another avenue used by scammers to try and trick investors out of their funds. There are illegitimate signal sellers that will try to sell a program to investors, claiming that it points out the best time for dealing in forex pairs.

This could be an automated or a manual system that makes use of economic news, technical analysis. It could also use both and in return, they ask investors to pay a periodic fee.

When thinking about it, it would not make sense for someone to sell a system that can predict the market so accurately when they could rather use it themselves to secure substantial profits. According to various experts, it is impossible to build or find systems that will allow monetary benefits in the market as the market is unpredictable.

There are market sentiments that can indicate trading opportunities, but they are not always accurate to the last movement and things can always change based on a variety of factors such as news, political and economic events, and others.

Only make use of legitimate signal sellers, either through a regulated and reputable broker, or a legitimate copy trading provider.


Investment Management funds that are phony

In the forex market, investors may be provided with a variety of promotions that endorses forex funds, especially on social media platforms. These typically have flashy market stories, but the results are typically unverified.

Scammers use these advertisements to lure in unsuspecting investors and the organisation will deny contacting investors once they have received funds, or investors may not be able to locate the scammers at all.


Author Details

Louis Schoeman

Louis Schoeman

Featured Forex and Stocks writer

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