ASIC has banned a former foreign exchange broker from the industry for three years, after it was found he was not fit to provide financial services and had not complied with related laws.
Steven Marsh, a former employee of Forex Capital Trading, engaged with clients to trade contracts for difference (CFDs) and margin foreign exchange contracts (FX contracts) from February 2018 to March 2019.
During this period, ASIC found that Marsh made misleading representations to clients, including that clients would profit from trading with his firm, despite there being no reasonable grounds for making this representation, particularly given that investing in CFDs is high risk.
ASIC also alleged that Marsh told clients they could reduce the risk of incurring trading losses if they increased deposits into their trading accounts, even though this would have the opposite effect and would place more of the client's money at risk.
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In doing so, ASIC found that Marsh had not complied with financial services laws, was not adequately trained, and was not a competent, fit or proper person to provide financial services.
The corporate watchdog also found Marsh engaged in unconscionable conduct.
"This included engaging in high pressure sales strategies and unfair practices in order to encourage clients to make deposits or delay or cancel client requests to withdraw their own funds from their trading accounts," it said.
"In finding that Marsh is not adequately trained or competent, ASIC found Marsh failed to provide the general advice warning when giving general financial advice and, on several occasions, provided personal advice."
Earlier in the year, ASIC cancelled the AFSL of Forex Capital Trading after it found that the brokerage's business model disregarded key licensee obligations, resulting in misleading and deceptive conduct.
"The size of the Australian market for OTC retail derivatives has grown considerably over recent years," ASIC said.
"With that growth, there has been a dramatic increase in complaints to ASIC in relation to conduct within the OTC retail derivatives market.
"ASIC has and will continue to take strong regulatory action to protect consumers of these products."