CFD investors join class action against IG Markets
A class action is being prepared against IG Markets on behalf of thousands of investors who lost an estimated $800 million trading contracts for difference (CFDs).
Law firm Piper Alderman and legal finance team Omni Bridgeway were working on behalf of up to 20,000 investors against IG Markets, alleging IG consistently marketed CFDs to inexperienced investors and facilitated those without proper checks and balances.
Data from the Australian Securities and Investments Commission (ASIC) suggested total losses by investors with IG Markets of over $800 million.
A CFD was a type of leveraged financial product which enabled investors to take a position on the movement of an underlying asset without owning the asset itself.
Strict conditions on CFDs had been imposed in Australia last year by the ASIC as it found 72% of retail clients lost money when using these products. The average loss between 2016 and 2021 was $9,000 a year when almost 70% of clients earnt less than $80,000 per annum.
This indicated a “very real concern” that the products were unsuitable for unsophisticated and vulnerable retail investors and should not have been marketed to every Australians who had little knowledge of trading.
Piper Alderman partner, Martin del Gallego, said: “CFDs are little more than a form of gambling which has left tens of thousands of Australians out of pocket. Our proposed class action will seek to recover these losses for investors who should never have been exposed to trading in such complex, high-risk products”.
The proposed class action would be registered in the Federal Court, following further investigation by Piper Alderman and Omni Bridgeway.
AUTHOR
Laura Dew
Recommended for you
Iress has announced it is strengthening its security settings after suffering an unauthorised access of its systems over the weekend.
Financial advice platform Otivo has made an experienced appointment from the US as its head of product strategy.
Apostle Funds Management has appointed the newly created position of director, head of wholesale as the firm expands its Australian footprint in the wholesale sector.
Recruitment manager Robert Half has shared the most in-demand roles in financial services that firms are finding difficult to fill, driven by ASIC’s growing focus on risk and compliance.
Were these products marketed by licensed advisers? Could this in the future be hidden under "good advice"? Will the current TMD regime clarify the inappropriateness of this product for an "average" investor? Last questions to ASIC: "where were you and are we going to be paying for this?"
Add new comment