WASHINGTON (Legal Newsline)
— The Securities and Exchange Commission (SEC) announced Nov. 10 EZTD Inc.
has been ordered to pay more than $1.7 million over allegations of misleading investors into
trading binary options over the internet.
Binary options usually
involve an all-or-nothing payout structure as investors bet on the increase or
decrease in value of a company stock. After a certain length of time, the
options contract expires. If the investor predicted wrongly, he or she could
lose their entire investment.
“EZTD’s revenues were
largely derived from customer trading losses, yet EZTD emphasized the
profitability of trading in binary options,” said Stephanie Avakian, deputy director
of the SEC’s Division of Enforcement. “Companies dealing in binary
options must disclose more than general statements about investment risk so
investors in these instruments understand that the odds are stacked against
According to the SEC, EZTD
failed to register the binary options, failed to register as a broker-dealer to legally
sell in the United States and failed to disclose on its trading platforms that
the potential to lose money was much higher than the potential to win money.
“We continue to receive
numerous investor complaints involving binary options websites,” said Lori
Schock, director of the SEC’s Office of Investor Education and Advocacy.
“If you have trouble withdrawing your money from an online binary options
trading platform, be aware that you may be the victim of a scam and should not
give the platform any more money.”