Women are being paid to use dating apps to lure male investors into highly-leveraged trades in Australia
- Women are being paid to use dating apps to lure male investors into trading highly leveraged trades, according to the Australian Financial Review.
- The women are given commissions from brokers if they're able to convince traders to buy into "contracts for difference," or financial products often leveraged 200 to 500 times.
- The Australian Securities and Investments Commission is working toward banning the contracts along with other risky options products.
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Investors are being duped into risky trades by women on dating apps and social media in Australia.
The Australian Financial Review reported that brokers are spending more than R2.9 billion a year on commissions for "introducers," which include women on messaging services and dating apps reaching out to traders.
The women receive large commissions if they're able to convince traders to invest in "contracts for difference," which are highly complex financial products often leveraged 200 to 500 times, according to the report.
Contracts for difference are an agreement between a buyer and seller that states the seller will pay the buyer the difference between the current value of an asset and its value at the expiration of the contract. In the event the difference is negative, the buyer is forced to pay rather than the seller.
See also: US prosecutors have charged a group of 80 mostly Nigerians in a romance scam that defrauded businesses and elderly women out of at least R90 million
Investors are also being lured with free gifts including tablet computers and bonus credits to cover margin calls, if the trader agrees to purchase a specific number of contracts, the Australian Financial Review reported.
Further, the Australian Financial Review said that investors are claiming the female introducers are approaching them as wealthy investors who made a fortune from trading contracts for differences. The women then often offer trading recommendations and easy ways to set up accounts.
The Australian Securities and Investment Commission is working toward banning contracts for difference and other risky options products. The ASIC is also suing in the National Australia Banks over its "introducer program," alleging the firm used hairdressers and gym instructors to lure borrowers into loans they couldn't afford to repay, according to the report.
The ASIC also said that investors have lost close to R21 billion from an estimated R228 trillion worth of contracts in the past year alone.
Supporters of the ban are encouraged by the regulator's shift to improve transparency in the market, while opponents say the issue lies with educating investors as opposed to changing the product, according to Australian Financial Review.
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