City Index Australasia (CIA) and its director Blair Jason Travers have been taken to Melbourne's Federal Court by the Australian Securities and Investments Commission (ASIC) and found guilty of a cold-calling scam.
Investors duped by the cold-calling scam will receive $38,000 reimbursement which ASIC froze and which the regulator estimates will return 62 cents in the dollar to the five investors who were caught out.
Both CIA and Travers were banned from operating in the financial services industry for 10 years.
CIA was found guilty of the scam which occurred between 24 August and 16 September 2011 and involved cold calling and then directing investors to false financial product information on the company's website.
CIA never held a Financial Services Licence (FSL) and misled investors by claiming an association with City Index Australia (which does have a FSL). It also claimed a long reputable history of generating returns for clients, and stated it was investing the money to generate returns for the investors.
CIA told investors returns would be generated through investments in contracts for difference, spread betting and foreign exchange markets.
Travers was found guilty of either knowingly or unknowingly being involved in the scam and was ordered to remove all advertising for the scam and disconnect phone lines associated with CIA.
ASIC Commissioner Peter Kell said removing rogue operators was important in ensuring investor confidence.
"While victims of CIA will receive some compensation following the urgent court orders we obtained in September last year to freeze investors funds, the scam will also be shut down and its operator banned from the financial services industry. This is crucial in preventing further people from falling victim to these scams" he said.
