London-based lawyers allege their clients have been duped out of vast sums of money by Israeli companies.

Shmuel Hauser, chairman of the Israel Securities Authority, said the scope of the online binary options business — short-term bets on the movement of financial instruments — meant closer coordination was required among regulators. Authorities in those countries were leading their own investigations with assistance from the ISA, he said. He declined to elaborate on how the investigations were being conducted or which companies were being looked into.

Binary options usually involve betting on whether individual shares, indexes, currencies or other securities will go up or down in a given period of time.

Unlike true options, winning bets pay only a fixed return, and they cannot be re-sold. But they can be bought online from a phone or iPad, making them accessible to amateur traders, who can end up losing thousands of dollars in a matter of minutes. Critics say binary options are just a form of gambling, with the odds often stacked against those making the bets.

Many large operators are based in Israel. He has asked the attorney general to consider amending the law to give him power to target groups that market the options abroad.

Hauser said that currently he can act against firms selling binary options abroad only if international regulators request that he investigate. Normally, he said, the ISA receives around four requests a year from foreign regulators. A Reuters special report published in September shed light on the extent of the industry and accusations by London-based lawyers, who say hundreds of their clients have been duped out of vast sums of money by some Israeli firms.

While the industry markets itself as a legitimate investment, clients of some firms say they are little more than high-pressure scams. They accuse the companies of transferring money between accounts without approval and in some cases of preventing them from withdrawing funds. To try to put the squeeze on the industry, the ISA is working with all enforcement agents in Israel, including the police, Finance Ministry and Justice Ministry, Hauser said. They hurt the public, especially the weak.

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This Is Why Binary Options Trading Is Simply A Scam

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