In the United States this week, the Commodities Futures Trading Commission announced the establishment of a special task force to investigate and prosecute foreign exchange trading scams at the retail end of the market. They were forced into action, the regulators said, because "unscrupulous operators are rife in the field".

The announcement by the Americans was broadly coincidental with the latest cease-and-desist order by Jamaica's Financial Services Commission (FSC) against a foreign exchange trading scheme, World Wise Partners.

Jamaican regulators, even if not saying so explicitly, have been making, substantially, the same claims about the raft of unregulated foreign exchange trading and investment schemes that have sprung up here in recent years.

Jamaicans, however, until recently, largely ignored the warnings, pumping, according to one study, up to $200 billion into these schemes, which fought hard to keep the regulators at bay. People were enticed by the promise of high returns, in some cases,upwards of 10 per cent a month. For a time, people got the promised returns, at least on paper.

Blamed regulators

Recently, these institutions appear to have gone bust, incapable of meeting their commitments to investors. They mostly blame the regulators, the FSC, because it demanded that they be properly policed, and their banks which, in line with money-laundering regulations, insisted on knowing the source of their cash flow.

It is bad enough that many Jamaicans, apart from their paper profits, will lose a lot of money, and that the island's economy seems likely to take a significant hit. Indeed, we believe that the second-quarter dive in consumer confidence was not unrelated to the sputtering in the schemes. Confidence and consumer spending are likely to have plummeted further.

But, for all that, what is even worse about the recent developments is the contempt that the principals of these funds appear to have for the people who put their cash with them.

Telling nothing

Take the case of World Wise, which went mum for several weeks and recently announced the resumption of its operation with an anodyne statement. The FSC's order does not allow World Wise to attract new customers, but it can pay out to existing ones - which is what it says it is doing. It is starting with the closing of small accounts.

Now, World Wise insists that all requests for refunds be made online, including people who did not use this process to invest their money and may not have access to or the facility of computers or the Internet.

The company says, too, that it will pay out on a first-come-first-served basis. It has not said, however, how long it will take to process applications or remit funds. Nor will it tell why it cannot pay immediately.

That last part is important. When it took the money, World Wise told its investors that only 20 per cent of their cash went to foreign exchange trading - the rest to safe investments. It stands to reason that its investors should be assured of this 80 per cent portion of their investment.

The greater disappointment is from David Smith's Olint Corporation, in which people had faith as the genuine operator, headed by a trading genius. Smith has waffled about his problems and the reason why Olint is under investigation in several jurisdictions.

Perhaps, it is time that the FSC emulate the US regulators.