Money Returning to Investors Harmed by Unregistered Broker

The Securities and Exchange Commission today announced that a Cyprus-based company has agreed to pay $11 million to settle charges that it illegally sold binary options to U.S. investors.  A judge signed a court order late yesterday authorizing the distribution of this money to harmed investors through a Fair Fund.

The SEC filed a complaint in 2013 against Banc de Binary Ltd., its founder Oren Shabat Laurent, and three affiliates alleging that they failed to register the offering before soliciting U.S. customers through YouTube videos, spam e-mails, and other Internet advertising.  They failed to register as a broker-dealer before communicating directly with U.S. clients by phone, e-mail, and instant messenger chats.

Binary options differ from more conventional options contracts because the payout typically depends entirely on whether the price of a particular asset underlying the option will rise above or fall below a specified amount.

Banc de Binary, Laurent, and the affiliates agreed to jointly pay $7.1 million in disgorgement and $1.95 million in penalties to the SEC as well as $2 million in penalties to the Commodity Futures Trading Commission (CFTC), which filed a parallel action.  The court has established a Fair Fund that will be administered by the National Futures Association to compensate harmed investors.  Banc de Binary, Laurent, and the affiliates also agreed to be suspended from the securities industry for a year and permanently barred from issuing any penny stock offerings.  The settlement has been approved by the U.S. District Court for the District of Nevada.

“Banc de Binary and its affiliates completely disregarded U.S. laws and registration requirements, and as a result they must surrender millions of dollars and be suspended from the industry,” said Michele Layne, Director of the SEC’s Los Angeles Regional Office.

The SEC’s investigation was conducted by Leslie Hakala, and the litigation was handled by John Berry, Amy Longo, and Ms. Hakala.  The SEC appreciates the assistance of the CFTC.

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Investor Alert

The SEC has become aware of some impersonators claiming to be affiliated with the SEC or other government agencies who have contacted harmed investors in this Banc de Binary case and asked them to pay a fee to facilitate their settlement payout.  It’s important for all investors to know that the SEC never makes people pay to get their money back.  The SEC’s Office of Investor Education and Advocacy today issued an investor alert warning investors about phony communications that may appear on official-looking documents purportedly from the SEC offering paid legal services to investors who are fraud victims.  Read the investor alert for more information about how to avoid these scams.

Investors in Banc de Binary binary options who have questions about the settlement distribution should contact the National Futures Association at 800-621-3570 or BDBRestitution@nfa.futures.org.  SEC enforcement staff on the case can be reached at LA4238@sec.gov.