A contract is meant to be a mutually observed provision for the purpose of determining the rights and obligations of each other. In the past exposure articles, we mentioned that in the foreign exchange recruitment and foreign exchange fund trading scam, it is often seen that traders have signed so-called foreign exchange (agent) trading contracts with so-called entity companies. Is such a forex trading contract legal and compliant? Can I get my principal back after the company fails to fulfill the terms of the contract?

Just recently, the court held a trial on a contract dispute case caused by foreign exchange trading on behalf of the trial process and results can answer our doubts, follow Tianyan Jun together!

First, entrusted financial management but lost millions of yuan

The plaintiff Mr. Lin and the defendant Xiao Zhang used to be close colleagues. Mr. Lin learned that Xiao Zhang often invested in overseas futures, and also wanted to join. Therefore, from 2018 to 2020, Mr. Lin successively transferred 1.177,500 yuan to Xiaozhang, asking Xiaozhang to help open an account in an international futures trading company and transfer the money into the account.

Later, Xiao Zhang opened a sub-account for Mr. Lin with his own account as the mother account, and the funds must be transferred from the mother account and then traded independently in the sub-account. Unfortunately, Mr. Lin's investment failure, the money has gone to no return, and the transaction fee rebate of about 340,000 yuan has been transferred to Xiaozhang's account. To this end, Mr. Lin asked Xiao Zhang to return all the investment money of 1.177,500 yuan.

Under Mr. Lin's urging, Xiao Zhang returned 340,000 yuan, and the colleagues fell out with each other. Later, Mr. Lin sued Xiao Zhang to the court, asking Xiao Zhang to return all the investment money.

2. The court ruled that the entrustment contract is invalid

Mr. Lin sued that Xiao Zhang forged futures software, tricked him into investing, and promised to operate on his behalf, so he repeatedly handed the money to Xiao Zhang.

Xiao Zhang responded that the transaction is Mr. Lin's own operation, the investment is risky, the profit and loss must be responsible, and has returned all the transaction fees to Mr. Lin.

After the court hearing, it was believed that Mr. Lin entrusted Xiaozhang to open a futures trading account, and successively transferred and paid a total of 1.177,500 yuan. Xiao Zhang provided a futures trading account, which can be operated by Mr. Lin using a mobile APP, so it can be concluded that there is in fact a legal relationship between the two parties. The two have violated the relevant financial laws and regulations of our country, and the entrustment contract between the two parties should be deemed invalid. On the other hand, Xiao Zhang could not prove that a futures trading platform legally existed in Hong Kong, transferred the money given to him by Mr. Lin to others, and failed to prove that all the money was transferred to Mr. Lin's futures account, and should bear the adverse consequences of failing to prove it.

Finally, the court made a judgment of first instance, and found that Mr. Lin and Xiaozhang were at fault for the losses caused by the performance of the entrustment contract, and bore the fault responsibility in accordance with the proportion of 50% of each. Since Xiao Zhang has refunded 340,000 yuan, transferred 30,000 yuan to Mr. Lin in December 2018, and the remaining 800.75 yuan is the loss of performing the entrusts contract, Xiao Zhang should pay 403,750 yuan to Mr. Lin.

First of all, according to the Regulations on Foreign Exchange Control, it is illegal for a trader to sign a so-called foreign exchange contract on behalf of an organization, and secondly, because such a trading behavior is not compliant, even if the futures platform recommended by Xiao Zhang is false, Mr. Lin cannot recover all his losses.

Sum up

So do you still think that the forex contract signed with the so-called entity company is still reliable? Presumably, the fraud gang behind the same understand that such trading behavior is not protected by law, dare to sign such a contract with the trader, and then wait until the fraud gang cheated enough money to run away, and wait for the trader to take the contract to the court against him! How to effectively protect the interests of their own investors, naturally is to choose a formal and safe trading platform!