Customers irate at futures trading firm

A company which goes by two names – Global Growth and Golden Global – has allegedly cheated US$1.48 million (K1.65 billion) from customers, according to local newspaper 7day Daily. The company reportedly tells clients that it is a branch of Standard Bullion, which is a member of the Chinese Gold and Silver Exchange Society.

The company is based in one of Yangon’s most expensive office buildings, the Sakura Tower. It has opened two separate offices on different floors, and put up signs to say that it is an authorised money changer.

However, it has allegedly been running a futures exchange broking business, allowing Myanmar clients to invest in countries such as New Zealand, Hong Kong, Taiwan and Indonesia. Futures trading is mostly conducted in contracts for commodities such as gold, oil and gas, and timber, as well as foreign currencies.

There are at least six or seven unlicensed futures brokers operating in Myanmar, according to an investigation by The Myanmar Times in April, most of which were established last year. Customers are required to pay a deposit of between US$500 and $10,000 to open an account, and must pay commission fees on investments.

However, many of the customers of Global Growth and Golden Global have been unable to claim their deposits back. “I didn’t lose too much, but some of my friends will lose about K100 million,” a former client of the company told The Myanmar Times.

A Myanmar company official told her that the problem was due to illiquidity and will be solved soon, but she no longer trusts the company. She also said that she is unsure whether the investment was legal, as the company is unlicensed and she possesses no legal receipt of her payment. “I knew the company was illegal, but I did not take it seriously,” she said.

Other clients are equally confused about the legal path they should take. “It is too early for suing. We have to wait. And legal action is expensive,” a former customer said.

Company officials and staff refused to answer questions about their business. “We can’t explain anything yet. And we can’t meet with journalists yet,” said a member of staff to Myanmar Times reporters at the office on June 15. Following this, a company official called security and ushered out reporters. Futures broking is illegal in Myanmar, but the number of companies offering the service is on the rise. Some of the newcomers are reportedly educating prospective customers about their business models in the offices of the largest business federation in the country – the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI).

In the prohibition and punishment chapter of the Securities Exchange Law, section 22 states that no one may operate a business of a stock exchange without permission from the Security Exchange Commission Myanmar, which is chaired by U Maung Maung Thein, who is also the deputy minister of finance.

Until now, the government has taken no action against the companies, despite the fact that newspapers have been reporting on illegal future brokerage businesses since May. However, U Maung Maung Thein may meet with journalists soon, his personal assistant said on June 15.

In April, he told The Myanmar Times that the government would serve serious warning notices to the brokerage companies personally. If they did not then stop their business then the government would instruct police to launch criminal investigations and prosecute them, he said.

Source: Myanmar Times

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