Fraud Advisory: Commodity Pool Fraud
The following information is designed to warn you about a type of fraud that involves individuals and firms, often unregistered, offering investments in commodity pools. In these fraudulent schemes, your money is misused (often spent on improper expenses). The pool operators advertise based on false claims of high profits and low risk.
Signs of a Possible Fraudulent Sales Pitch
- Lead you to believe you can profit from current news already known to the public.
“As a result of that hurricane, the price of oil futures will increase substantially.”
- Made through word of mouth referrals or emails from friends, relatives, members of churches or social groups – one fraudulent pool operator even solicited his cancer support group.
- Claims to know unique market trends or to have a record of highly profitable trading.
- Promises quick, large and guaranteed returns.
- Contacts you asking for personal information such as your full name, phone number, email or home address.
- Requests cash immediately.
Possible Persuasion Tactics You May Experience
- Dangling the prospect of wealth and enticing you with something you want, but can't have.
"This gold purchase is guaranteed to double in three months!"
- Trying to build credibility by claiming to be with a reputable firm or to have a special credential or experience.
"Believe me, as a senior vice president of EZY Money Inc., I would never sell an investment that doesn't produce."
- Leading you to believe that other savvy investors have already invested.
"This is how Bob got his start. I know it's a lot of money, but I'm in—and so are my mom and half her club—and it's worth every dime."
- Offering to do a small favor for you in return for a big favor.
"I'll give you a break on my commission if you buy now—half off."
- Creating a false sense of urgency by claiming limited supply.
"There are only two units left, so I'd sign up today if I were you."
Before Investing in a Commodity Pool, Ask, Ask, and Ask Some More!!
- Contact the CFTC at 866.366.2382 or the National Futures Association to check the company’s registration status, business background, and disciplinary history.
- Ask for copies of the account statements that registered trading firms provide to the pool operator.
- Ask to see the commodity pool’s risk disclosure documents and performance history.
- Ask about all fees and commissions charged by the commodity pool operator.
- Ask how the financial professional is qualified to provide you with this service.
- Ask how the product meets your financial needs.
If you have questions, are aware of suspicious activities, or believe you have been defrauded, please let the CFTC know quickly. Call the CFTC or visit the File a Tip or Complaint page.