Beware the Binary Option Trading Contract

On November 10, 2016, the SEC announced charges against an Israeli-based firm related to its sale of binary option trading.  The SEC fined the firm more than $1.7 million for failing to register the binary options as securities, failing to register as a broker-dealer for its sales of binary options to U.S. investors, and for misleading investors in its disclosures related to the risks associated with binary option trading.

In connection with this enforcement action, the SEC also issued an “Investor Alert” on the same day, warning potential investors that many binary option trading contracts are not properly registered with the SEC and may be associated with fraudulent investment schemes.

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