SEC v. Banc de Binary Ltd., Case No. 2:13-cv-00993 (D. Nev.).  On June 6, 2013, the SEC announced charges against Banc de Binary for unlawfully selling binary options.  Binary options are options contracts where the payout depends on whether the underlying asset increases or decreases in value.  With binary options, there are only two outcomes for an investor – either they get a pre-determined amount of money if the value of the asset increases, or they get no money if the value decreases.  The SEC alleges that Banc de Binary offered and sold binary options without first registering the securities with the SEC.  Through YouTube videos and spam email, Banc de Binary induced investors to purchase binary options whose underlying assets included stock and stock indices.  The SEC also alleges that the company acted as a broker when selling the options, but did not register as a broker with the SEC.  The SEC’s complaint charges the company with violating Section 5 of the Securities Act and Section 15(a) of the Exchange Act.  The SEC is seeking disgorgement, civil monetary penalties, and injunctive relief.

The SEC and the Commodity Futures Trading Commission (“CFTC”) today issued a joint Investor Alert to warn investors about fraudulent promotional schemes involving binary options and binary options trading platforms which can be found here.  The CFTC also announced the filing of parallel charges against Banc de Binary