Illegal Chinese activity lands derivatives provider in court
The Australian Securities and Investments Commission (ASIC) has commenced proceedings against Union Standard International Group over illegal Chinese activities.
The Sydney-based firm, which was now in liquidation, and its former corporate authorised representatives Maxi EFX Global AU Pty and BrightAU Capital Pty Ltd, provided trading in margin FX products to clients in China. However, it was illegal for Chinese residents to deal or trade in FX contracts.
ASIC alleged the firm was exposing these clients to potential administrative and criminal penalties under Chinese law and placed them at risk of contravening Chinese law.
Union Standard was alleged to have failed to comply with its obligation to do all things necessary to ensure financial services covered by its licence were provided efficiently, honestly and fairly. It was also liable for the conduct of the two authorised representatives and made false or misleading representations to potential clients.
ASIC alleged the two authorised representative firms:
- Provided personal advice to clients when not licensed to do so;
- Made false or misleading representations to clients including about the level of risk to which clients’ funds were exposed and the profits which clients could expect to generate; and
- Engaged in unconscionable conduct, including by:
- Used high-pressure sales tactics to encourage clients to deposit more money, open more positions or discourage clients from withdrawing funds;
- Facilitated trading by clients who were at a disadvantage, for example, by virtue of the client’s trading inexperience, low level of income and lack of understanding of the complex products issued by Union Standard; and
- Failed to adequately explain or disclose to clients the risks involved in investing in its financial products.
AUTHOR
Laura Dew
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