She dreamt of a private jet with pink leather seats, but she lost a big inheritance.
Betrayal of trust: Helen Travis checked Option.FM on a comparison website before investing, but was not alerted to the dangers.
Helen Travis thought there must have been some mistake when she logged in to her online trading account one morning in April.
Over the previous nine months, the 57-year-old divorcee from Macclesfield had poured more than £640,000 into Option.FM, an online binary options platform. Through the website, account holders can place wagers on movements of stocks or currency — that the euro will fall against the pound, for example — over periods of as little as 30 seconds. Lured by a friendly but forceful account manager called Steve, who convinced Travis she would soon be“living the dream”, she had handed over all the inheritance from her recently deceased father.
Banc De Binary boss Oren Laurent, left, sponsored Liverpool FC
The last time she had checked, the balance had ballooned, with incentives and a few trades, to more than $1m (£770,000). Steve joked via Skype chat that Travis would soon have her own Gulfstream jet, “with pink leather seats”. He added: “You’ll have no worries. I can promise you.”
Yet when she checked her account on that fateful spring day, nearly all her money had disappeared. The balance had dropped to just over $12,000. Steve offered little comfort: “He told me that the markets had moved against me,” Travis said. What markets? “He didn’t say. I don’t even know what he bought. He never told me.”
Travis burst into tears. “I felt, uh, everything,” she said. “I can’t even put it into words. It was awful.” After she complained, she was paid the remaining balance — $3,348 — and then shut out of the account.
Option.FM, which did not respond to inquiries, is one of dozens of binary options companies that have flooded the web and social media with offers of get-rich-quick financial trading schemes. The City of London police last month told The Sunday Times that binary options were the “latest and fastest-growing iteration of investment fraud”.
Most of these companies are based offshore, are unregulated in Britain and thus virtually impossible to prosecute. Complaints have quadrupled since 2014, according to the police, with the average loss topping £20,000 — Travis’s is thought to be the biggest so far reported in Britain.
A Sunday Times investigation into Option.FM revealed a sophisticated structure that has allowed it to operate in this country despite censure in at least three other countries. This newspaper has also established links between Option.FM and one of the industry’s biggest companies, Banc De Binary, an official sponsor last season of Liverpool football club.
This includes a shared international headquarters address in St Vincent and Grenadines, a group of Caribbean islands with a population of 109,000.
Banc de Binary denied any relationship with Option.FM. Both companies have sprawling, stateless structures typical of the industry.
Option.FM is headquartered in St Vincent, but its clearing and billing are done in Bulgaria, while its website was registered in Belize. Until recently, it listed offices in Hong Kong.
Last year, Hong Kong’s stock market regulator issued an “alert” against Option.FM, adding: “The company gives the above Hong Kong addresses but it is not located there.”
Travis was wary, so before she parted with any cash she checked a comparison website. The results were reassuring. It said Option.FM was “the second or third highest-rated binary company”, Travis said.
There was no mention that Option.FM had been put on a warning list by the Ontario Securities Commission in Canada, or that the Australian regulator cautioned investors that the company, “could be involved in a scam”.
Comparison sites are a key part of the industry’s edifice. Many would-be “traders” use them to choose a company or assuage concerns. The objectivity and ownership of many of these sites is unclear. For example, near the top of the toptenbinarybrokers.com ranking is Banc De Binary, which was fined $11m (£8.5m) in February over charges of soliciting business in America in contravention of a ban. In May, Australian financial regulator Asic warned investors not to use Toptenbinarybrokers because it offered “unlicensed financial services”.
Both Banc De Binary and Toptenbinarybrokers’ websites were registered in Scottsdale, Arizona, by Domains by Proxy, a firm specialising in concealing the identity of a sites’ owners.
Binary options are dressed up as financial trading but they are simple gambling operations. Win, and you collect between 30% and 80% of your wager. Lose, and it’s all gone. Companies draw in punters with claims of outsized, “guaranteed” returns, promising that they will be guided, trade by trade. But the “brokers” are simply persuasive salesmen.
He told me the markets had moved against me. I don’t even know what he bought
Holland is the latest to crack down, with the finance minister vowing last month to impose an advertising ban after its regulator branded the industry “toxic”.
Britain is one of the biggest markets, where so far companies have avoided censure. That is because many operators base themselves in other EU countries, such as Cyprus, where, overseen only by the island’s watchdog CySec, they are given “passporting” rights to offer services throughout Europe but escape scrutiny from domestic authorities.
Option.FM, which does not fall under Cypriot law, is prolific in Britain. Tommi Su, an engineer from Singapore who also helps binary victims recover cash, said a third of his clients claim they were swindled by the company.
Banc De Binary is bigger. It is run by Oren Laurent, 32, a citizen of the US and Israel, who recently made the news for sponsoring Israeli Olympic athletes — and for paying part of the company’s $11m US fine.
Last month Southampton football club announced a sponsorhip deal with the company, which has also left a trail of British victims. After The Sunday Times raised questions about its conduct, Southampton dissolved the partnership.
On the Option.FM website there is no discernible link with Laurent’s company, but The Sunday Times has seen emails from Option.FM to two different clients that were signed by Banc De Binary employees and which included the latter’s letterhead and logo. It also appeared as the counterparty to transfers in Travis’s bank records. Of the apparent overlap, Banc de Binary said: “We are not the owners of any other brands including Option.FM.”
Travis has filed complaints with several authorities against Option.FM. “I’m strong. I’ll survive,” she said. “But others aren’t, and these companies prey on people.”
