ASIC’s case against Forex CT in the Federal Court will allege the company breached the ban on conflicted remuneration by paying its account managers bonuses based on client “net deposits”, and that it failed to act in client best interests when giving personal advice.
The regulator said the company also “engaged in a system of unconscionable conduct” by using high-pressure sales tactics such as offering clients incentives to transfer more money into their trading accounts, recommending inappropriate trading strategies, making false or misleading statements to clients, encouraging a trading floor culture that was directed towards maximising trading volume and client deposits rather than compliance with legal requirements, establishing disincentives for clients to withdraw funds from their trading accounts, and failing to ensure compliance with financial services laws.
The best interest duty and conflicted remuneration contraventions attract a maximum civil penalty of up to $1 million, while unconscionable conduct attracts a maximum civil penalty of $420,000 for an individual and $2.1 million for a body corporate.
ASIC will also allege the company’s director, Shlomo Yoshai, failed to discharge his duties under the Corporations Act, which attracts a maximum penalty of $200,000.
The group previously had its licence cancelled and ASIC obtained court orders last year to prevent the transfer of property or client money overseas.
