CFTC files complaint against Banc de Binary for breaching off-exchange options trading ban

The US Commodity Futures Trading Commission (CFTC) filed a civil complaint in the Nevada federal district court on June 5, charging online broker Banc de Binary for breaching restrictions on offering off-exchange options trading to US customers.

The regulator also charged the broker with operating as an unregistered futures commission merchant (FCM) from July 2011 to March this year.

According to the CFTC's complaint, Banc de Binary was pitching commodity-linked binary options in the US between May 2011 and March this year. The products were linked to wheat, oil, platinum, sugar, coffee, corn, currency and stock indexes.

"If a company wants to offer US persons the opportunity to buy and sell predictions on the direction of commodity prices, the company must play by the rules or suffer the consequences. The applicable rules are on the books for good reason – to protect market participants and promote market integrity – and we will serve the public by enforcing them," says David Meister, director of the CFTC's division of enforcement.

The CFTC seeks civil monetary penalties, an injunction preventing Banc de Binary from participating in certain commodity options activity with US customers, and requests it pays back losses suffered by customers.

The CFTC worked alongside the Securities and Exchange Commission, the UK Financial Conduct Authority and the Cyprus Securities and Exchange Commission in its investigation.

CFTC division of enforcement staff members responsible for this case are David Slovick, Margaret Aisenbrey, Jessica Harris, Mary Lutz, Kathleen Banar, Rick Glaser and Richard Wagner.

The CFTC today also announced the issuance of a joint CFTC and SEC Consumer Alert on fraudulent schemes involving binary options and their trading platforms. The alert warns customers that the perpetrators of these schemes allegedly refuse to credit customer accounts, deny fund reimbursement, commit identity theft and manipulate software to generate losing trades.