25 June, AtoZForex .com Lagos – Late last year, we reported that The Australian securities and exchange commission has imposed a $1.6million settlement liability on Interactive brokers, the US based automated global electronic market maker and broker. The levy stemmed from concerns from ASIC was concerned that IB did not comply with its responsible lending obligations when issuing margin loans by not verifying customers’ financial information.
The agreement led Interactive brokers to refund $1.5 million in fees and commissions to its Australian clients which were allowed margin lending facilities between 2010 and 2013 and will also pay $100,000 to the Financial Rights Legal Centre for the purpose of consumer education concerning financial services and consumer rights in Australia.
In follow up to this, ASIC exits Interactive broker from the region, ordering the US broker to wind down it’s OTC FX trading services to Australian clients. ASIC is also assessing whether the IB breached the Corporations Act, Miriam Phillips, a Sydney-based ASIC media spokeswoman said by e-mail to Bloomberg. Caitlin Duffy, a Greenwich, Connecticut-based spokeswoman for Interactive Brokers, declined comment.
“ASIC has requested Interactive Brokers to cease providing all over-the-counter FX services in Australia, and has requested the provision of further information to enable ASIC to decide on an acceptable orderly exit mechanism from that business in Australia,” Miriam Phillips said.
Interactive broker had been operating within ASIC’s jurisdiction without a license since 2013. The regulators put the firm under the category of “no action position” on the basis that the online broker would get a license that authorized its local Australian unit as a market maker, said Phillips. ASIC withdrew that position last week, and said Wednesday that it’s not ready to grant Interactive Brokers the license.
//
Another recent issue resulting in an enormous fine on the broker is an order to settle trust fund beneficiaries; Brian and Jessica Parker with $1.2million in compensation. The settlement is based on claims that the broker aided and facilitated “reckless trading” by their trust fund overseer. They claimed that a trust fund worth of $800,000 was invested with the aim to cater for their welfare in their father’s will, but was mismanaged and reduced to just $75,000 in four years time. They alleged that 90% of their funds were lost by Robert Dillard, the trustee of the account through margin trading and options strategies. They also alleged that Interactive brokers “approved and assisted” the trustee’s negigent approach to managing the account.