October 19, 2020 | AtoZ Markets – A federal court in Australia has imposed a fine of AU $75 million (about $53.6 million) on three companies: AGM Markets Pty Ltd (AGM), OT Markets Pty Ltd (OTM), and Ozifin Tech Pty Ltd (Ozifin).
Why the Australian court fined the three brokers
The fine was the result of a lawsuit between brokers and the Australian Securities and Investments Commission (ASIC), which received many complaints against brokers from retail traders and began to investigate their activities.
In February last year, the court sided with the regulator, accusing the companies of their "systematic dishonest behavior" in the sale of over-the-counter derivatives. Brokers' investors lost about AU $32 million (about $22.7 million).
ASIC first opposed these companies in February 2018 and revoked its AGM license that same year.
“The serious nature of the violations and the need to send a clear signal to the OTC derivatives licensees justify the high sanctions,” the judge said in the ruling.
Fines speak louder than words
AGM is due to pay AU $35 million ($24.8 million) and the other two companies will pay A $ 20 million ($14.19 million) each.
“The general AGM fine is higher than the OTM and Ozifin fine because the company did not fulfill its obligations as an AFSL holder,” the judge noted. "Such a fine will act as a deterrent for other AFSL holders," especially those who are participants in the OTC derivatives market, and will encourage them to better monitor their representatives. "
All three companies must start paying affected customers. Their number reaches 10 thousand. The court also appointed bankruptcy commissioners to all three companies.
Read also: Australia Court Fines ANZ $7.14 Million for Unconscionable Conduct
“The retail OTC derivatives sector remains the focus of the ASIC's focus given the identified misconduct in the industry,” said ASIC vice chairman Daniel Crennan. “AGM, OTM and Ozifin have systematically behaved in bad faith, abusing investor ignorance and financially harming vulnerable segments of the population. The established fines demonstrate serious consequences for firms committing such misconduct. "
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