The Federal Court has found AGM Markets, OT Markets and Ozifin Tech engaged in systemic and unconscionable conduct while providing over-the-counter derivative products to retail investors in Australia, costing them $30 million.
The companies used account managers that were often located offshore to engage with retail investors in Australia.
The Australian Securities and Investments Commission (ASIC) commenced its investigation into the companies following many complaints from investors who were subjected to high pressure sales tactics and misleading statements about the products profitably.
The court found the account managers:
- Provided personal advice to clients when the companies were licensed to do so;
- Provided advice not in the best interests of the companies’ clients; and
- Made representations that were false, misleading or deceptive, including representations with respect to the risks of investing in derivative products, the risks to which funds deposited by clients into their trading accounts would be exposed to and the profits that clients were likely to generate from their trading.
Having assessed the actions of the account managers, the court also found:
- The companies engaged in misleading and deceptive conduct;
- Provided unlicensed personal advice; and
- Advice which was not in the best duty of their clients.
Justice Beach found AGM contravened its Australian financial services licensee (AFSL) obligations under s912A(1) of the Corporations Act to provide financial services “efficiently, honestly and fairly.”
A further hearing on penalty and relief would be held, but the date had yet to be determined.
On 9 November, 2018, ASIC had cancelled AGM Markets’ AFSL after an investigation found their financial services business involved core element on unconscionability and unmanaged conflicts of interests, and followed a business model that disregarded key conduct requirements.
ASIC had previously disqualified former director Yossef Ashkenazi for eight years.