November 10, 2016

Israeli-based trading firm EZTD Inc. will pay more than $1.7 million for misleading investors into trading binary options over the internet.  Binary options generally have an all-or-nothing payout structure in which investors bet on the increase or decrease in value of a company stock or other securities serving as the underlying asset.  The options contract expires after a fixed time period.  If an investor’s prediction was wrong, then all of the investment can be lost.  According to the SEC’s order, EZTD failed to register as a broker-dealer, failed to register the binary options, and failed to disclose on its trading platforms that there was significantly greater potential for investors to lose rather than earn money.  The SEC’s order found that less than 3 percent of the approximately 4,000 U.S. investors who opened accounts with EZTD actually made any profit on their investment.  The SEC also issued an investor alert detailing red flags that signal binary options fraud and warning investors never to put in more money in an attempt to win back money lost.  SEC

Tagged in: Financial and Investment Fraud, Securities Fraud,