Is Pocket Option a Scam? Unregulated Broker Faces Scrutiny

In the realm of online trading, selecting a trustworthy and regulated broker is paramount for investors. However, the landscape also includes unregulated brokers that raise serious concerns. In this article, we explore the case of Pocket Option, an unregulated broker operating in Saint Vincent and the Grenadines, a jurisdiction often associated with offshore tax havens. Notably, the UK's Financial Conduct Authority (FCA) has issued a warning against this broker for providing unauthorized services. We delve into the unusual and irregular records associated with Pocket Option, shedding light on why it's crucial to exercise caution when dealing with unregulated entities.

Pocket Option's Claimed Identity and Regulation

Pocket Option asserts that it is operated by Gembell Limited, registered in the Republic of the Marshall Islands (IRI) under registration number 86967. However, our investigation reveals that this claim lacks a factual basis, as records from the IRI indicate that Gembell Limited has been dissolved. Furthermore, while Gembell Limited on its homepage states that it is regulated by the International Financial Market Relations Regulation Center (IFMRRC), it's essential to clarify that IFMRRC does not oversee entities engaged in forex activities. In essence, the Pocket Option operates without effective regulatory constraints.

Fundamentally, Pocket Option operates without any oversight from regulatory authorities. Entrusting one's capital to such a broker carries substantial risks, as there are no appropriate legal safeguards in place to protect the invested funds. This situation undoubtedly raises concerns about the legitimacy and credibility of the broker.

Belgium's FSMA Warning

The irregularities surrounding Pocket Option prompted action from regulatory authorities. On June 5, 2023, the Financial Services and Markets Authority (FSMA) in Belgium added Pocket Option to its warning list, categorizing it as a fraudulent trading platform. This move by the FSMA further emphasizes the concerns surrounding Pocket Option's operations.

FSMA warning: https://www.fsma.be/en/warnings/beware-these-new-fraudulent-trading-platforms-0

A Closer Look at Pocket Option

Pocket Option, as previously mentioned, is an unregulated broker registered in Saint Vincent and the Grenadines. This Caribbean nation, along with Saint Lucia, is often perceived as an offshore tax haven. It's imperative to note that the UK's FCA has specifically cautioned against this broker for providing unauthorized financial services.

Regulatory Ambiguity

The entity operating the Pocket Option website is PO Trade (SV) Ltd, registered in Saint Vincent and the Grenadines. Simultaneously, PO Trade Ltd is also registered on the nearby island of Saint Lucia. While the company's website claims to be regulated by the International Financial Market Relations Regulation Center (IFMRRC), this regulatory body is not officially recognized.

In September 2021, the UK's FCA issued a stern warning, suggesting that PO Trade might be offering financial services or products in the UK without the necessary authorization.

Key Concerns

There are several major issues associated with the Pocket Option:

Identity Inconsistency: Pocket Option's online presence raises significant questions about the company's true identity. On different sections of its website, it attributes all broker activities to PO TRADE LTD, while on other pages, it names Gembell Limited, registered in the Republic of the Marshall Islands, another jurisdiction often associated with offshore activities. Such inconsistencies cast doubt on the broker's transparency and integrity.

Lack of Regulation: Pocket Option operates without supervision from any government agency or reputable regulatory body. The FCA has explicitly warned against its unauthorized promotion and sale of financial services.

Geographical Restrictions: Notably, Pocket Option excludes residents of any European Economic Area country, the United States, the United Kingdom, Japan, or Israel from its services. These exclusions limit the broker's potential clientele and raise questions about its approach to compliance.

Unclear Investor Protection: Investor protection is not guaranteed, and the terms and conditions regarding account protection are vague. The customer agreement merely stipulates that "all disputes between the company and the client are to be resolved through negotiation and correspondence within the framework of the complaint procedure."

Withdrawals and Fee Ambiguity: Withdrawals can only be processed in a "manual mode," and the company retains the right to extend the withdrawal process up to 14 business days. Additionally, the website lacks transparency in terms of fee structures, leaving traders uncertain about potential charges.

Modifications to Customer Agreement: Pocket Option retains the authority to modify the customer agreement, either partially or entirely, without any obligation to inform the client. The company explicitly states that it "shall not be liable for any losses incurred by the client through the use of services provided by this company."

Limited Customer Support: Although chat and phone support are available, customer service is not offered via email, and inquiries can only be made through the website's contact form.

Recovering Your Funds

Pocket Option claims to be regulated by the International Financial Market Relations Regulation Center (IFMRRC), although this is not a recognized regulatory body. The company states on its website that it has a compensation fund, yet the terms governing access to this fund are unclear.

To safeguard your interests, it is imperative to conduct thorough research on any broker before making deposits. In cases of concern, documenting all interactions, saving emails and chat records, and taking screenshots can provide valuable evidence for potential regulatory intervention.

If you have fallen victim to a broker's misconduct, there are recourse options:

Bank Dispute: Request a refund from your bank, which can reverse disputed funds from the seller's account if services were not provided as promised.

Legal Measures: Pursue legal action and consider obtaining a Mareva (freezing) injunction against the company responsible for the misconduct.

Conclusion

the concerns raised by Pocket Option's lack of regulation, transparency, and investor protection are significant. Choosing to trade with this broker should be approached with extreme caution, if at all. In the world of online trading, the priority should be the safety and security of your investments, which can often be better ensured by selecting regulated and reputable brokers.