The Australian Securities and Investments Commission (ASIC) announced raising civil proceedings in Federal Court against Union Standard International Group Pty Ltd (trading as usgfx) and its former corporate authorised representatives, Maxi EFX Global AU Pty Ltd (trading as EuropeFX) and BrightAU Capital Pty Ltd (trading as TradeFred).
The Australia watchdog claims that Union Standard provided financial services including trading in margin FX products to clients in China in situation where it was illegal for Chinese residents to deal or trade in those foreign exchange contracts. According to ASIC, Union Standard’s conduct put its China-based clients at risk of contravening Chinese law and in this way exposed them to potential administrative and criminal penalties under Chinese law.
ASIC stated that Union Standard failed to comply with its obligation to do all things necessary to ensure that the financial services covered by its licence were provided efficiently, honestly and fairly.
ASIC stated that EuropeFX and TradeFred:
- provided personal advice to clients without licence to do so;
- made false or misleading representations to clients including about the level of risk to which clients’ funds were exposed and the profits which clients could expect; failing to adequately explain or disclose to clients the risks involved in investing in its financial products.
- engaged in unconscionable conduct, such as high-pressure sales tactics to encourage clients to deposit more money; facilitating trading by clients who were at a disadvantage.
ASIC also claims Union Standard:
- is liable for the conduct of its corporate authorised representatives as Australian financial services licensee;
- made false or misleading representations to potential clients.
ASIC is seeking a relief including declarations of contraventions and pecuniary penalties.
The FX broker USGFX and BrightAU Capital Pty Ltd are in liquidation. ASIC suspended USGFX’s AFS licence in July and BRI Ferrier (NSW) Pty Ltd were appointed as administrators of the company.
