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ARTICLE · 08 AUGUST 2016

District Court Charges Two Firms With Unlawful Off-Exchange Binary Options Trading

Hogan Lovells Cadwalader
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A federal district court entered an Order of Final Judgment by Default that requires two non-U.S. web-based binary options firms to jointly and severally pay a $3 million civil monetary penalty and $1,587,731 in restitution to their defrauded customers.

United StatesLitigation, Mediation & Arbitration
Hogan Lovells Cadwalader
Hogan Lovells Cadwalader
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A federal district court entered an Order of Final Judgment by Default that requires two non-U.S. web-based binary options firms to jointly and severally pay a $3 million civil monetary penalty and $1,587,731 in restitution to their defrauded customers. The Order also imposed permanent injunctions and permanent trading bans against the two entities for offering such options to retail U.S. customers despite the CEA's ban on off-exchange options trading and off-exchange swaps trading, and for engaging fraudulently in connection with such transactions.

Among other findings, the Order determined that the two firms:

  • failed to register as designated contract markets, exempt boards of trade or bona fide foreign boards of trade prior to executing binary options transactions, which "therefore constituted unlawful off-exchange options and unlawful swaps"; and

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