Victim of $100,000 offshore-trading loss tells story

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This article was published 12/03/2016 (3848 days ago), so information in it may no longer be current.

He sounded remarkably calm for someone who just lost $100,000 investing through an offshore-trading website.

Ken, a retired Manitoba pipeline worker who didn’t want his last name published, is the unnamed investor cited in a Manitoba Securities Commission news release issued Thursday. The release warned investors about the dangers of investing through offshore-trading websites and in one website in particular — onetwotrade.com, which is operated by a company called Up and Down Marketing Ltd.

Ken said he agreed to tell his story to the Free Press in hopes others will learn from his mistake.

The 74-year-old matter-of-factly explained he’s been successfully trading stocks on the Toronto Stock Exchange (TSX) for more than 20 years, and by January of this year had about $100,000 in his investment account.

Then he made the mistake of responding to an online advertisement from Malta-based onetwotrade.com, which claimed to specialize in trading binary options.

“I was just going to play with it and see where it went,” he explained. “But it got out of hand.”

He said he lost the $100,000 in a series of transactions spread out over a six-week period in January and February of this year. To make matters worse, he paid for most of the transactions with his credit card. So not only did he lose the money, he’s now stuck with a hefty credit card bill.

Jason Roy, the MSC’s senior investigator, said Friday binary-option scams have been around for a couple of years, and cases involving onetwotrade.com have also surfaced in other provinces.

“It seems to be the hottest new scam out there on the investment side.”

The MSC describes binary options as a sort of “wager” where investors bet on the performance of an underlying asset — often a currency, stock index or share — usually in a short period of time. When that period is up, the investor receives a predetermined payout or loses the wager.

“It’s an all-or-nothing proposition,” it adds. “With some of these offshore investments, no actual trading takes place, and it is just a tactic used to steal an investor’s money. A request to send your money offshore to an unregistered firm is a red flag for investment fraud.”

Roy said the MSC has issued past warnings about the dangers of investing in binary options and of sending money offshore. It has also warned investors against using a credit card to pay for an investment and has urged them to always check if an individual or firm is registered to sell securities in their province before dealing with them — something Ken admits he didn’t think to do.

While Ken mainly blames himself for his predicament, he also maintains his credit card company is partly to blame for approving charges to his card by onetwotrade.com that not only exceeded what he had agreed to invest, but far exceeded his pre-approved borrowing limit. He said he plans to sue the credit card company in hopes of recouping some of his losses.

While his investment account was wiped out, Ken said he’s not destitute. And the experience hasn’t deterred him from investing.

“I’ve been up and down all of my life, so it doesn’t matter. This was a dumb one, that’s all,” he said. “But I’ll just stick with the TSX. If I stay with what I know, I’ll be OK.”

He said he’s done well on some of his latest stock market trades, so he’s gradually rebuilding his investment fund. He’s also thinking about going back to work for a while as a bulldozer operator to earn extra money.

His parting advice to other investors? “Look before you leap, and look hard.”

murray.mcneill@freepress.mb.ca