Good point, @peterma. And that, sadly, goes for all sectors of the finance business, not just prop firms. They just happen to be the “flavour of the day” at the moment. We’ve had in the past, scammy off-shore brokers, illegal platform plug-ins, binary options, and on it goes.
Ultimately, the only way to fully protect the näive and their money is to ban these activities entirely. But what would that achieve? Just another innovative avenue opening up somewhere else. And why should the majority have to be penalised just because of the laziness of the few in checking what they are doing with their money!
The same principle operates throughout society. We enact laws and consequences to protect the public, and we install policing and justice institutions to enforce them. But what happens if, as so often happens, one cannot rely on the police services or courts of law. The same goes with regulating authorities in the finance sector.
As you say, one’s own due diligence is always necessary as far as it can go. But there will always be the cracks in the armour that let the arrows through.
I find these topics extremely depressing, but they are important and should be talked about on such forums wherever such vulnerable people gather. It is all the more important that posters remember that we here are all on the same side of the story - and there is no need for hostility amongst one’s own troops. There is more than enough of that on the “outside”!
Thanks for the post
PS: One additional thought. When one looks on the inside of the prop firm we also see them having to take precautions against being scammed themselves by their traders!! E.g. copy trading across accounts, using signals from external services, etc. Scamming is not, it seems, a one-way street!