Checking Your Futures Broker and Forex Broker for Fraud

Have you considered investing in managed futures or trading futures and commodities yourself? How about trading forex or including foreign currency in your managed futures portfolio? Futures and forex are among the largest markets in the world and therefore offer a lot of opportunities for investors to diversify away from stocks and mutual funds. Of course, if you’re an investor you want to find the investment firm or money manager that has the best record for investment returns. Meanwhile, if you are a trader you want the best futures or forex broker service but with the lowest commission. But a step that often gets left out is researching the broker, investment firm, or money manager that you’re doing business with and trusting your money to. Cases like Bernie Madoff’s ponzi scheme fraud should teach all of us to be very careful who gets to touch our hard earned money. It doesn’t mean you should just shy away from investment opportunities and keep your money in a C.D. that earns next to nothing. That’s like not driving to work because there are other drivers on the road that may be a hazard. There are always risks in investing, just like every other aspect of life. The question is what’s the best way to deal with it?

The NFA’s B.A.S.I.C. Database for Background Checks

In the U.S., the futures markets (stock indexes, commodities, bonds) and forex markets are all regulated under the CFTC (U.S. Commodity Futures Trading Commission) and the NFA (National Futures Association). So whether you’re investing or trading futures or forex, the best place to start doing background checks is the NFA’s B.A.S.I.C. database ( ). Nearly all individuals and firms, current and past, that have been involved with the futures industry has records on the NFA’s B.A.S.I.C. database, freely accessible to the investing public. When we at MarketHEIST review and approve brokers, advisors, and investing services for our readers to use, our main focus is protecting them from any fraudulent or illegitimate investing services. We’ve found the B.A.S.I.C. database to be the best place to start for researching anyone or any company involved in futures or forex.

The information is very complete with records from the CFTC dating back to 1975, NFA records since 1982, and information from all U.S. futures exchanges from at least Jan. 1990. B.A.S.I.C. is very easy to use. Just simply type in either the company/firm name, NFA membership ID, or the person’s name. You’ll find the firm or person’s full name and business information, current and past registration, the registration’s they hold to know what businesses they’re allowed to conduct, and any cases against them and what the courts rulings are. There are records and disciplinary history on over 150,000 individuals and 10,000 firms involved with the futures industry.

Of course, there are legitimate traders, often individual traders, who do well who are not registered. Or, many may have held licenses and registrations in the past but may have let those expire so they have more freedom in their trading. So, use your common sense and look into any questionable history or activity someone has been involved in. If you’re serious about handing over your money to someone, or at least let a broker hold the money while you place the trades, you owe it to yourself to follow up on any questionable history until you have a peace of mind.

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