I count all my money wherever Stella went

Broker not paying out?

Private investors who want to trade in financial products need a broker. But the selection of brokers is large, which does not always make it easy to find the right broker.

Even among the brokers there are black sharpnesses, which in the worst case scenario are fraudsters who do not pay out your money (“Broker does not pay out”).

Investors should therefore find out more about them before choosing a broker in order to avoid unpleasant surprises from the start.

The following article is intended to give an overview of the activities of a broker and also show what legal options the investor has if the broker does not pay.

Our immediate tip:

Act fast! When it comes to the “exit scam” of fraudulent brokers, it is important to be among the first to request a withdrawal. The first payouts are often still made by the broker, the rest then come away empty-handed. Don't be “the rest”! We can help you in a timely manner!

Quick overview

What is a broker?

Before we get into what to do if the broker doesn't pay money, we need to understand what a broker is all about. A broker is a financial service provider that is responsible for executing securities orders from investors.

The broker acts on the account of the customer and can trade on his behalf in various financial instruments, such as raw materials or foreign currency.

The activity of a broker is also not limited to a specific trading venue, it trades on stock exchanges and over-the-counter trading venues. Brokers receive a so-called brokerage fee for their work, which is a commission that the broker receives for each transaction.

What should be considered when choosing a broker?

Whether a broker ultimately pays what is yours depends on whether it is a reputable broker that pays out money properly or not. Choosing the best broker for each individual is not always easy, traders should find out more about this and see which broker meets their own requirements.

When choosing a broker, there are a few things to consider, with the service for many investors in the foreground (most important question: does the broker pay out money when I apply?).

So when choosing a broker, investors should think about what things are of particular importance to them and what service they want from their future broker.

It goes without saying that the broker pays you money, but in reality there are always problems.

High frequency trading is becoming more and more important

In the meantime, high-frequency trading on the stock exchanges plays a major role, with buy and sell instructions being made in fractions of a second using algorithms.

Private investors also want to be able to act as quickly as possible and give buy and sell instructions. For this reason, the availability of the broker is an extremely important point, which is particularly important for investors who want to react in good time to events on the stock exchange.

It should therefore be ensured that the broker can be reached at least during trading hours and also how the customer can reach him, because there are sometimes different contact options.

With some brokers it is only possible to place an order over the phone. It should also be ensured that not all brokers based in Germany also offer a German-speaking service.

Brokers who offer a wide range of products are particularly interesting for investors who like to trade certificates such as ETFs, stocks and forex, because not all brokers offer the same services for their customers. Experiences of other users, to what extent the broker pays money according to the contract, should be researched on the Internet.

What are the fees of a broker?

Investors in this country attach great importance to security and transparency, so it is important to know the fees of your own broker. Just like the various products, the brokers also differ in terms of fees.

For example, stocks that are directly traded have a different fee structure than stocks that are traded as CFDs.

The broker fee can be a one-time commission for the respective trade or the fees are charged in the form of a mark-up on the spread between the bid price and the asking price.

The so-called spread is the difference between the buying and selling price. Investors can get an overview of the costs of the individual brokers on various pages on the Internet and compare them with one another.

For example, investors who trade a lot should make sure that the broker offers low fees when buying and selling securities individually. Order fees play a major role for day traders, while financing costs play a far more important role for position traders.

Broker does not pay out, now what?

If the broker doesn't pay, the customer is stressed. If the investor was able to choose a broker, it sometimes only becomes clear when the payment is made whether it is a reputable or dubious broker.

The problems that can arise with the withdrawal are many. It is not limited to the fact that too little or no money is paid out.

There can also be significant delays in withdrawals, but the use of poor exchange rates is also not uncommon. The CFD broker market in particular offers room for dubious brokers, which is why it is most common here that traders are not paid their money.

CFDs (Contracts for Difference) are highly speculative derivatives that are associated with increased opportunities, but also with increased risks. CFDs therefore represent a speculative investment in which large trading positions can be opened on the market with a small investment of capital.

It differs from stocks in that the purchaser of a CFD does not hold a stake in a company, but is merely the holder of a claim.

If the broker does not pay out, there are a few things for those concerned to consider. On the one hand, it plays a big role where the broker is based and whether or not it is a regulated broker with a license.

Where is the broker based?

Traders can basically choose a broker freely, it does not matter in which country it is based. But above all this can always lead to problems if the broker does not pay out and is based outside of Germany.

A large number of brokers are based abroad, for example countries with low corporate taxes.

Cyprus is popular among brokers because it has such low corporate taxes and Cyprus belongs to the EU and brokers can therefore offer their services within the EU.

Brokers who are based in the EU are obliged to manage all customer funds separately from business assets in an escrow account, so that they do not flow into the bankruptcy estate in the event of insolvency. Customer accounts are also secured with up to 100,000 euros.

Regulated and Unregulated Brokers, What's the Difference?

The regulation of brokers is an important feature for their seriousness, but this does not mean that brokers from other EU countries, which are not regulated, also have to be dubious.

However, should it come to the fact that it is a broker based outside the EU who does not pay the trader the money, it will be difficult, but not impossible, to take legal action against him.

For this reason, investors should be particularly careful with brokers without a license and obtain detailed information about them.

Brokers who have a license are generally considered reputable and legitimate and also symbolize reliability and honesty. The most important thing, however, is that traders with brokers with a license have a contact person who they can turn to if problems arise.

The obligations of a regulated broker include the following:

  1. Account verification
  2. Deposit protection through the investor compensation fund
  3. could segregated
  4. louder advertising
  5. professional customer service
  6. frequent business reports to the regulatory authority

Brokers who are not regulated, on the other hand, do not have to meet any obligations. Traders who turn to a dubious broker generally run a greater risk than would be the case with a regulated trader.

Because brokers who are not regulated do not have to answer to any higher institution and can handle their way of acting as they want.

Fight against dubious brokers

The rapidly growing binary options market is also increasing the number of dubious brokers who want to deprive investors of their money and, in the worst case, no longer pay it off at all.

The European financial supervisory authorities are trying to take action against dubious brokers by tightening license conditions. The financial supervisory authorities also publish and update lists of dubious brokers who offer their services despite a lack of a license.

But despite the efforts of the European authorities, there are still a large number of dubious brokers on the market.

If customers suffer damage from such brokers, be it that they do not pay out money or the customer is damaged in some other way, the question always arises as to what legal options the investor has.

Signs of a dubious broker who may. does not pay off

Dubious brokers can be identified not only when there are problems with the payout and this probably does not happen. Unsolicited calls, so-called "cold calls", are the first signs that the broker may be dubious.

Such contact is a customer acquisition, with the aim of winning investors as customers of foreign brokers without a license.

Once the fraudsters have succeeded in turning investors into customers, various tricks are used to deprive them of their money. Affected customers report that problems with communication arose after a short time.

E-mails were ignored and calls were not accepted. Above all, brokers of so-called binary options try to get customers to trade large sums of money through generous bonuses. These bonuses often come with a variety of conditions.

There are reports of cases in which traders have to trade 40 times that in order to pay out the bonuses. With such conditions that are placed on a payout, traders should be extremely careful and at best avoid the broker.

There are also brokers who completely disappear from the scene when investors want to have their money paid out. At the latest, if the broker does not pay out the money, it becomes clear that it is a fraud.

What are the legal options for investors if the broker does not pay?

When trading CFDs, bonuses and advantages promised by brokers play a particularly important role. Here dubious brokers use a few tricks to make it more difficult for traders to get their money.

Sometimes traders have to reach a certain trading volume in order to be able to withdraw their money.

A big problem, which mainly occurs with unregulated brokers, is that they refuse to pay out even though the customer has met all the conditions for a payout. Such cases may constitute criminal fraud.

However, fraud is only present if the broker actually intends to refuse the payout, although the customer is entitled to the payout.

In such a case, it is possible to file a criminal complaint against the respective broker with the police. It becomes difficult to take action against the broker who does not always pay out if he is a non-regulated broker based outside the EU.

Unfortunately, fraud is not uncommon with brokers

In addition to a denied payout, which is a fraud, there are also brokers who try to get customer data through fake websites

If the broker does not pay out, injured parties can also take civil law action against them. Because if the broker does not pay out, the first question that those affected ask is how they can get their money back in such a situation. Basically, there is a claim for damages against the person concerned if he illegally does not pay out the money.

However, it is not easy for those affected who have been cheated by an unauthorized broker to get their money back. Often these brokers are intertwined in large companies, which makes it difficult to see through the exact structure.

The company locations of such brokers are usually located in tax havens outside the EU, which makes it difficult to proceed under civil law in the event of a non-payment.

Foreign brokers are more difficult to reach - but often possible to make the payout here!

Companies that are based in so-called tax havens also usually have bank accounts that are also subject to tax restrictions and only keep the money for a short time.

Since dubious brokers are always aware of their actions and know that they will be liable to prosecution if they do not pay out the money, they hide themselves through the anonymity of the tax havens and use false names.

Victims whose broker does not pay the money can try to work with financial regulators and enforcement firms. For example, in some countries there are funds that are made available to victims of such fraud.

In such a case, it also makes sense to entrust yourself to a lawyer who specializes in the relevant area of ​​law, who in the best case scenario ensures that the broker pays.

If you find yourself in the situation that your broker is not paying your money, please do not hesitate to contact us. Based on your individual case, we will show you which legal options exist for you and how you can best get back your invested capital.

If your broker does not pay out, you should not waste time and seek advice from a lawyer immediately and take legal action against the relevant broker. As a specialized law firm, we represent those affected nationwide.

Update

On the website of the Federal Financial Supervisory Authority (BaFin) there are references to unreliable brokers and providers of financial services:

Financial market supervisory authorities from other countries also regularly publish warning notices.