Rav Stern on Forex

The Hareidi Rabbi is shocked that his legal decision that profits from Forex were not to be classed as interest were taken as a reccommendation.

Jonathan Degani , | updated: 6:45 AM

Note:Mr. Degani wrote this article at the request and with the approval of HaRav (Rabbi) Stern

The Talmud in Bava Batra relates a story of spies from the tribe of Dan who encountered the grandson of Moses serving as the priest for an idol.  “What are you doing here?” the spies asked.  “How could you be serving an idol?”  Moses’s grandson responded that he was there for the money.  “I have a tradition from my grandfather,” he stated, “that it is better for one to work in the service of an idol (avodah zarah) than to rely on other people to support him.” 

The Talmud explains that Moses’s grandson misunderstood his words and took his statement out of context.  What Moses meant was that it is better for one to do work (avodah) that is unusual (zarah) for him than to rely on the support of others.   Unfortunately, Moses was not the last Rabbi whose words were taken out of context, thereby causing the children of Israel to err.A few months ago, FXCM, a foreign currency exchange (forex) business, began to target the Hareidi market.  As part of their marketing platform, they approached HaRav Shmuel Eliezer Stern for a "heter iska", a halachic document that states that profits made by Jewish investors in a Jewish owned company are not interest, which is prohibited by Jewish law, but are shared profits from return on investment.  Upon receiving this "heter iska" from the Rav, articles were published in various Hareidi papers praising FXCM and using the Rav’s name and his association with Rav Vosner’s Beit Din as a banner to turn the "heter iska" into a "hechsher" (kosher seal of approval)  for FXCM’s business
The notion that a "heter iska" is a seal of approval for a business is “very far from the truth.”
among potential Hareidi clients.

However, the Rav wishes it to be clear that the articles in these papers took the Rav’s granting a "heter iska" out of context.  The Rav explained that he only gave a "heter iska", and therefore only looked to see if profits were interest or a return on investment; he did not advocate the business in any way.  And while articles published in Hareidi news sources called this heter iska a “first step of the business’s actions towards the Hareidi sector,” the Rav, upon being approached about the subject, said that this was not his intention and that the notion that a "heter iska" is a seal of approval for a business is “very far from the truth.”

More recently, the truth about forex is beginning to come to light.  A few weeks ago, Arutz Sheva published an op-ed that I wrote called “Beware of FXCM and Forex Dealers.”  The article explains the dangers of the forex market, how forex dealers misrepresent risk, abuse leverage and present information in a way that encourages customers to trade greater sums more regularly and amplify risk.  Around a week after the article was published, I was contacted by an Arutz Sheva reader and friend of HaRav Stern who asked that I speak to the Rav personally in order to clear the issue

In the conversation with HaRav Stern, the Rav explained that he did not know of the tremendous risk of FXCM and the foreign currency exchange markets.  He said that he was shocked that his granting a "heter iska" was used as any sort of
The Rav contacted FXCM and told them that they may no longer use his name in order to advocate their business.
advocacy in articles written in praise of FXCM.  Furthermore, the Rav resented that his association with Rav Vosner’s Beit Din was mentioned in the articles; the Rav gave the "heter iska" entirely on his own.  Finally, the Rav said that upon his friend reading him the article from Arutz Sheva, he contacted FXCM and told them that they may no longer use his name in order to advocate their business.

The Rav made it clear that if the intention of any business is to cause another to gamble, take chances with extraordinary risk of losing money in order to try to turn a profit then it is against the hashkafah (worldview) of the Torah.

The responsibility to stay away from scams like forex rests on the consumer.  There is no such thing as a get rich quick scheme.  King Solomon wrote that, “He who runs to get rich quick will not go unpunished. (Mishlei 28:20).”  This does not mean that God will strike down every man that tries to win the lottery; it means that a person who thinks he is going to get fast money without any catch is just missing the catch.  The next time you pass the lottery stand, come across a forex site, or hear about a get-rich quick MLM, stay away; they are more likely to take your money that give you any.
Remember King Solomon’s advice above. He was not only the wisest of men, but the richest as well.