It's only June 11th, but it's already been a busy month for Banc de Binary, one of the most popular and fastest-growing Forex brokers 
in the world. Earlier in the month the brokerage proudly announced its new Italian regulation, falling under the umbrella of the Italian Securities and Exchange Commission (CONSOB). This new regulation is the third for Banc de Binary, a company that is also regulated by CySEC and the United Kingdom's Financial Conduct Authority (FCA).
In less-happy news, however, last week, the U.S. Commodity Futures Trading Commission (CFTC) filed a civil complaint charging Banc de Binary with violating the CFTC's ban on off-exchange options trading by offering U.S. customers the opportunity to trade commodity option contracts.
Founded in 2009, Banc De Binary agreed to comply with all federal and state laws regarding banking and compliance procedures and was to observe CFTC requirements which precluded any new US clients until the completion of negotiations.
According to the CFTC allegations, Banc de Binary has been operating its online trading website which has allowed U.S. customers to trade options products prohibited by the CFTC's ban. In addition, the brokerage unlawfully solicited and executed trades, permitting U.S. customers to buy and sell options betting on the prices of coffee, corn, oil, wheat, sugar, foreign currency pairs, and stock indices.
The CFTC's complaint also charges Banc de Binary with operating as an unregistered Futures Commission Merchant (FC). In addition, the complaint alleges that the company did not limit its options offerings to eligible contract participants and allowed U.S. customers to trade without requiring any information about their net worth or trading history.
The SEC Weighs In
The CFTC announcement was followed immediately by a statement issued by the Securities and Exchange Commission (SEC), the body responsible for regulating and overseeing the activities of exchanges and sites in the United States. The SEC's pronouncement warned potential investors on possible risks associated with all off-exchange binary options products, and posted its intention to prosecute Banc de Binary for the same two transgressions as cited by the CFTC"”for offering off-exchange binary options to American customers as well as for operating as an unlicensed Futures Commission Merchant (FCM), also an offence in the United States.
According to the SEC's complaint against Banc de Binary filed in federal court in Nevada, the brokerage began offering and selling binary options to U.S. investors in 2010. From that time on, it encouraged investors to open accounts with the company, deposit money into those accounts, and then purchase binary options whose underlying assets include stock and stock indices. Soliciting trades to U.S. customers was prohibited by SEC regulations.
In a bulletin issued jointly by the SEC's Office of Investor Education and Advocacy and the CFTC's Office of Consumer Outreach, the two regulatory organizations warned of the potential risks of investing in binary options, and warned investors that by purchasing unregistered binary options they will be investing their money without the full safeguards of the federal securities and commodities laws.
The CFTC is requesting civil monetary penalties and remedial ancillary relief, such as restitution, disgorgement, and rescission. It is also seeking an injunction preventing Banc de Binary from engaging in certain commodity options activity with U.S. customers. The SEC grievance seeks disgorgement, monetary penalties as well as temporary and permanent injunction against the brokerage.
It should be noted that although binary options trading is hotly debated (and even frequently contested) in the United States, the actions taken by the CFTC don't have any bearings on the company's service in other regions of the world. In fact, the claims against the company are limited to its operation without a license, not its improprieties in relation to the trading itself. It stands to reason that the face of binary options trading in the country will shift dramatically in the coming months, as Forex trading has done in the region.