ASIC stated that the Australian Federal Court has ordered Forex CT to pay a $20 million fine for engaging in systemic unconscionable conduct.
June 2, 2021 | AtoZ Markets – An Australian Federal Court has ruled against Forex Capital Trading Pty Ltd, (Forex CT), ordering the broker to pay a penalty of AUD20 million for engaging in ‘systemic unconscionable conduct’.
Additionally, Shlomo Yoshai, the company’s sole director and the former Chief Executive Officer, has been ordered to pay AUD400,000 in fines. Earlier, the AtoZ Markets reported that the Australian Securities and Exchange Commission (ASIC) banned Yoshai for ten years from providing any financial services.
However, the court reduced his ban to eight years as his behavior was deemed as ‘incompetent and irresponsible’.
Many other Forex CT employees were earlier banned from activities in the financial services industry for years.
Commenting on the fine, ASIC Commissioner Cathie Armour said:
”The significant penalty handed down by the Court reflects the seriousness of this conduct. If corporations disregard the law and their client obligations, ASIC will take action, and the consequences can be severe.”
The Australian financial market regulator moved against the forex and CFDs provider in 2019, alleging the broker for misconduct, misleading clients, and failure to manage conflicts of interest.
It was blamed for using a highly pressurized sales culture at the company as accounts managers were pushing risky financial instruments to the investors. Moreover, the company recommended inappropriate trading strategies to clients, along with misleading or deceptive representations.
The company maintained a trading floor culture that was focused on maximizing trading volume and client deposits and failed to ensure compliance with financial service laws. Furthermore, Forex CT ran an employee remuneration scheme and rewarded account managers with commissions based on net deposits.
The regulator canceled Forex CT’s Australian Financial Services (AFS) license for the violations and dragged it to court. In addition, ASIC received a court order against the company to prevent it from transferring assets or client money overseas.