Promoters of foreign exchange trading and gold and silver offerings are among the biggest regulatory concerns in retail investing, a commodities regulator said Thursday.
The vast majority of retail customers who trade in foreign currencies lose money on the investments, but advertisements often portray them as risk free, said Aitan Goelman, enforcement chief with the Commodity Futures Trading Commission.
Many retirees who saw their stocks drop during the recession are under the mistaken belief that gold and silver are the only safe investments, he said.
Promoters feed this belief by say touting gold and silver as investments that naturally go up in price and only decline as a result of market manipulation, he added.
The CFTC Enforcement head made his remarks at a Georgetown University Law School forum, where he was joined by Securities and Exchange Commission Enforcement Director Andrew Ceresney and the Justice Department’s financial fraud section head, Kathleen McGovern.
Ceresney and McGovern urged firms to report suspected law and rule violations quickly.
“It’s a mistake for companies to spend months talking to everyone in the business,” said Ceresney.
By coming to SEC enforcement staffers after determining an illegal act may have occurred, Ceresney said his people can determine whether it is best for a company to continue an internal investigation or whether the SEC should start interviewing workers itself and possibly conduct an undercover investigation.
McGovern said her section has put a renewed focus on prosecuting individuals.