Invast penalised for misleading statements
Sydney-based Australian Financial Services licensee (AFSL), Invast Financial Services Pty Ltd, has paid $20,400 in penalties after the Australian Securities and Investment Commission (ASIC) issued two infringement notices for alleged misleading representation.
The penalties related two statements that appeared on the company's website in May 2014 and in an email to prospective clients in April.
The representations on the website contained a link that invited investors to download a demonstration to undertake ‘risk-free trading' of contracts for difference (CFDs) for foreign exchange.
In a statement, ASIC said it was concerned that a reasonable investor may be misled into believing that the platforms promoted in the demonstration involved risk-free trading, rather than understanding that the demonstration account was risk free.
Further, ASIC was concerned that a statement on the AFS licensee's website that ‘Forex CFDs allow you to buy one currency whilst simultaneously selling another' was misleading because CFDs are derivatives and, by their nature, do not involve acquisition or selling of the underlying asset.
In addition, ASIC was concerned that an email to prospective clients which contained a statement claiming investors could access ‘low risk, high reward trading opportunities' by viewing Invast's video tutorial and e-book was inconsistent with disclaimers in the email. The disclaimers said, ‘trading in FX and derivatives can be risky and you may incur a loss that is far greater than the amount you invested.'
ASIC was concerned that, in general, both the email to prospective clients and statements on the website misled consumers about the inherent risks of trading foreign exchange and derivatives.
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