1. WHAT IS A FUTURES CONTRACT?

A futures contract is an agreement to buy or sell a specific amount of a commodity or financial instrument at a particular price on a stipulated future date. The price is established between buyer and seller on the floor of the futures exchange.

Futures contracts are highly speculative, volatile and leveraged, and are not suitable for the average investor.

2. WHAT ARE FUTURES MARKETS?

Futures markets are exchanges where futures contracts and options on futures contracts are traded. Different exchanges specialize in particular kinds of contracts, which include contracts for commodities such as grains, metals, foods and contracts for financial instruments.

3. WHAT ARE THE FORMS OF FUTURES FRAUD?

The most common forms of futures fraud include the following:

• Inappropriate management of accounts;
• Deceptive sales methods;
• Fraudulent communications;
• Failure to disclose risk associated;
• Unauthorized offering or selling of over-the-counter futures contracts.

4. WHAT IS FOREX?

An over-the-counter market where buyers and sellers conduct foreign exchange transactions, also called foreign exchange market.

Foreign exchange are instruments employed in making payments between countries – paper currency, notes, checks, bills of exchange, and electronic notifications of international debits and credits.

5. WHY IS THERE SO MUCH FRAUD IN FOREX?

There has been a significant rise in fraudulent activities in FOREX over the past few years. Financial markets have witnessed a steady upswing and investors are lured by the promise of significant returns. FOREX fraud involves any trading scheme used to defraud investors by persuading them that they can expect enormous profits by trading on the foreign exchange market. FOREX scams involve churning of customer accounts, mismanagement of customer accounts and outright fraud.

6. WHAT IS THE DIFFERENCE BETWEEN SECURITIES ARBITRATION AND FUTURES ARBITRATION?

Both securities arbitration and futures arbitration are governed by two different sets of laws. These sets of laws are separate and distinct because they govern two types of investment vehicles: securities and futures.

Securities arbitration is governed by securities law, such as the investment acts and laws promulgated by the Securities and Exchange Commission (SEC) and the National Association of Securities Dealers (NASD).

Futures are regulated by the Commodities Futures Trading Commission (“CFTC”) and the National Futures Association (“NFA”).