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Investing Money in PAMM Accounts: Legal Aspects

Investing in a PAMM account is a very attractive way of investing money for profit. After all, you just need to entrust your money to experienced players in the financial services market, and serious dividends are almost in your pocket. But is it really?

I do not want to compare PAMM investing with financial pyramids, since these are fundamentally different things, but I can not but remember the first MMM company that caused losses to millions of people. The success of MMM was associated primarily with the legal and economic illiteracy of the population. People did not understand how to check the liquidity of a company, its type of activity, as well as its legality. But they willingly believed beautiful advertising with the participation of the stars of their favorite TV shows.

Investing in PAMM accounts, unlike financial pyramids, is an investment in real activity. But this activity is associated with high risks, which every investor must understand. The role of an experienced trader in the financial market, of course, is of great importance, but he also sometimes loses. In other words, competently investing in a PAMM-account you have more chances to make money on the financial services market than by doing trade in person without any experience. But there is a risk and he is high. True, brokers offering to invest in PAMM accounts write about this in a very minor underscore on the last pages of electronic contracts. But the current legislation of the Russian Federation and the CIS countries requires the PAMM-account broker to comply with certain rules, which should protect the depositor.

From a legal point of view, you need to cooperate only with those brokers and traders who comply with applicable laws. The law equates investing in PAMM-accounts in the transfer of property assets into trust management. By law, it is forbidden to transfer only money to trust management, which, however, immediately transfers most of the organizers of PAMM accounts to the category of semi-legal enterprises. On the other hand, in the financial market only one currency from a currency pair is recognized as money, the second is considered a commodity, so you can draw up an agreement to invest in PAMM accounts in the legal field. But the most important thing is that using investors’ deposits, the trader is obliged to inform all his counterparties that he uses not his own, but trusted funds. Only then, the trader is liable to the investor with the sum of the deposit, otherwise he is liable to the investor with all his property. That is, if he loses, he will give out of his own funds. Of course, not one broker does not draw up a contract in full in accordance with current legislation. But many brokers are registered in guaranteeing payment of funds to depositors, which is also a legal requirement. Thus, investing in a PAMM-account, the investor receives a guarantee that in the event of a trader’s loss, he will be able to get back at least the amount that he has invested.

Thus, before investing in a PAMM account, you need to understand what a PAMM account is, you need to know what a company is, how many years it has been in the financial services market, and what reviews about it. Find out the legal address and details of the broker to know where to make a complaint in case of disagreement. PAMM-account maintenance activities require a license, the presence of which you can ask the broker. Find out whether the trader is a member of the fund for guaranteeing payments to depositors, which particular fund and where it is located. Remember that the risk in any case is high and therefore it is not worth investing funds borrowed or loaned. Invest only the amount of money with which you can leave without much hardship for yourself.

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