The Australian Securities and Investments Commission (ASIC) announced this Friday that it has taken Forex Capital Trading Pty Ltd (Forex CT) and its sole director, Shlomo Yoshai to court over allegations from the regulator the company engaged in unconscionable conduct.
In particular, ASIC has started civil penalty proceedings in the Federal Court of Australia, claiming that Forex CT “engaged in a system of unconscionable conduct, which was aided by Mr Yoshai.”
ASIC accusations
The regulator has accused the retail over the counter (OTC) derivative issuer with using high-pressure sales tactics to persuade clients to transfer more money to the firm, recommending inappropriate trading strategies to clients, making false or misleading statements and fostering an unhealthy culture which did not promote compliance with financial law, among other transgressions.
Forex CT provided trading in contracts for differences (CFDs) and margin foreign exchange (forex) contracts. The unconscionable conduct accused by the Australian authority attracts a maximum civil penalty of AU$420 thousand for an individual and AU$2.1 million for a body corporate.
Furthermore, ASIC also alleges that the company contravened a ban on conflicted remuneration under the Corporations Act. It did so by paying account manager bonuses primarily based on client “net deposits”.
Forex CT has also been accused of failing to act in the best interests of clients when giving personal advice, which is required under the Corporations Act, the watchdog said. These alleged contraventions attract a maximum civil penalty of up to AU$1.0 million for a body corporate.
“ASIC also alleges that Mr Yoshai failed to exercise his powers and discharge his duties as a director in accordance with s.180(1) of the Corporations Act, a contravention that attracts a maximum civil penalty of $200,000,” the regulator said in its statement today.
As part of its proceedings, ASIC is seeking declarations that Forex CT did engage in misleading or deceptive conduct and, under its Australian Financial Services (AFS) licence, contravened its obligations under s912A of the Corporations Act.
Forex CT AFS licence cancelled in June
As Finance Magnates reported, at the beginning of June, ASIC cancelled the AFS licence of Forex CT. The firm’s license was cancelled because the agency found that its business model disregarded key obligations of an AFS licensee, resulting in unconscionable conduct, misleading and deceptive conduct and a failure to manage conflicts of interest.
Less than a month later, the Aussie watchdog banned Steven Marsh, a former employee of Forex CT, from providing financial services for three years. Marsh was employed with the company as an account manager between the 19th of February 2018 and the 20th of March 2019.
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