In a press release on Monday, the Australian Securities and Investments Commission (ASIC) said the Australian Federal Court found that certain CFD issuers engaged in systemic unconscionable conduct with customer losses totalling over $83 million.
Australian Federal Court Says CFD Issuers EuropeFX and TradeFred Engaged in Systemic Unconscionable Conduct
The court is said to have ruled that collapsed Union Standard International Group Pty Ltd (USG), along with its former authorised representatives BrightAU Capital Pty Ltd (trading as TradeFred) and Maxi EFX Global AU Pty Ltd (trading as EuropeFX), engaged in systemic unconscionable conduct and other legal breaches, resulting in customer losses exceeding $83 million between 2018 and 2020.
“The Court heard customers of EuropeFX and TradeFred lost over $83 million during the period of the extensive breaches of the law by these CFD issuers, including systemic unconscionable conduct, misleading and deceptive conduct and the provision of unlicensed personal advice,” ASIC stated.
Justice Wigney found that the companies profited directly from their clients’ losses, incentivising account managers to pressure customers to deposit more funds.
It was reported that vulnerable and inexperienced investors were targeted through misleading onboarding processes, with many said to have been unaware of the risks associated with complex financial products like contracts for difference (CFDs).
The Court also determined that USG breached its Australian Financial Services (AFS) licence obligations by offering services to Chinese customers without warning them of potential civil or criminal liability under Chinese law.
ASIC Deputy Chair Sarah Court hailed the ruling as a vital step in safeguarding Australia’s financial services reputation.
“The conduct of licensees providing services to overseas customers under their AFS licences has attracted considerable attention from regulators globally and this judgment is important in protecting the reputation of Australia’s financial services licencing regime,” she said.
Justice Wigney condemned the conduct of EuropeFX and TradeFred, describing it as “offensive to conscience.”
Customers lost money in up to 99% of cases, while the firms profited by taking opposing positions on trades.
ASIC concluded that the matter has been listed for a case management hearing on 19 February 2025.
