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Thursday 15 October 2015

15-293MR ASIC cancels retail derivative issuer's licence

Following its investigation, ASIC has cancelled the Australian financial service licence (AFSL) of LSG Group Pty Ltd , formerly known as NZ Global Financial Trading Pty Ltd, Easy Capital Global Pty Ltd and AIFA Global Pty Ltd (ACN 154 582 242) (LSG). The cancellation of the AFSL is effective 30 September 2015.

LSG held AFSL 418008 with authorisations to provide financial product advice, deal in a financial product and make a market in derivatives products to retail and wholesale clients.

LSG ran two websites - www.nzgft.com.au (Australian website) and www.nzgft.com (Chinese website).

Following a hearing, the ASIC Delegate found LSG:               

  • had repeatedly failed to comply with the conditions on its licence and financial services laws, including failing to lodge financial statements, auditors reports, significant breach reports, and to notify ASIC of changes of control of the licensee or lodge a Product Disclosure Statement (PDS) in use notice. Breaches of licence obligations and financial services laws occurred over an extended period between 2013, 2014 and 2015 under both the current and former ownership and management of LSG. Remedial action was taken only after ASIC intervened and notably in each case, such action was not immediate and often took many months to occur.
  • made misleading or deceptive representations on its Australian website and its Financial Services Guide and PDS concerning products it offered, including a "Guaranteed Capital with Bonus Scheme Plan" and a "Cash Dividend Plan".
  • made misleading or deceptive representations on its Chinese website including:
    • an announcement and further statement promoting the "Guaranteed Capital with Bonus Scheme" Plan.
    • a promotion titled "Win Double Profit for Expert Advisors Real Account. Expert Advisors masters can get $1 million US dollar".
  • failed to do all things necessary to conduct financial services in an efficient, honest and fair manner in relation to a deposit of US$100,000 received from an overseas client.

ASIC has the power to suspend or cancel an AFSL where the licensee fails to comply with the condition on its licence or breaches a financial services law. 

'It is vital that AFSL holders comply with their reporting requirements to ensure that creditors and investors who use financial reports, have the proper information to make informed decisions.' ASIC Commissioner Greg Tanzer said. 

'Licensees will not be absolved of their obligations, including those relating to previous or ongoing breaches by a change in control or ownership. Any prospective new owners and managers should ensure they conduct adequate due diligence before acquiring a licence and assume responsibility of the licensees obligations.'

Background

LSG held with authorisations to provide financial product advice, deal in a financial product and make a market in derivatives products to retail and wholesale clients.

LSG ran two websites - www.nzgft.com.au (Australian website) and www.nzgft.com (Chinese website)

Consumers can check if a company or individual is licensed by searching ASICs professional registers.

This work continues ASIC's focus on licensee compliance in the retail OTC derivative sector, including margin FX, CFDs and binary options.

Recent outcomes include:

  • British Virgin Island company FIBO Group Limited (FIBO) and Cyprus company, Trading Point of Financial Instruments Limited (also known by the trading name XM.com) (Trading Point), agreeing to cease providing unlicensed financial services to Australians (refer: 15-233MR)
  • suspending the AFS licence of Australian Capital Advisory Services Pty Ltd on the grounds it had ceased providing financial services after a change of control (refer: 15-217MR)
  • following an investigation, Advanced Markets agreeing to change potential misleading statements on its website (refer: 15-085MR)
  • following an investigation, suspending the AFS licence of FX provider AGM Markets Pty Ltd (AGM) (refer: 15-075MR)
  • warning investors not to deal with Grandegoldens (refer: 15-066MR). It is not licensed to trade in margin FX in Australia.
  • cancelling Enfinium’s AFS licence because, among other things, concerns around inadequate risk management systems (refer: 15-026MR)
  • following a surveillance, Calibre Investment changed the way it offers FX services to retail clients (refer: 14-327MR)
  • restraining Monarch FX and its former director and general manager, Quinten Hunter, from carrying on a financial services business (refer: 14-342MR)
  • shutting down Vault Market and removing its sole director, Mr MD Anamul Amin, from the financial services industry (refer: 14-309MR)
  • warning investors not to deal with YoutradeFX (refer: 14-306MR). It is not licensed to trade in margin FX in Australia
  • Pepperstone agreeing to stop providing financial services in Japan following inquiries by ASIC that revealed they were not licensed by the Japanese Financial Services Agency (refer: 14-267MR)
  • cancelling the AFS licence of online FX broker Global Derivative Services after an investigation found it failed to comply with a number of its licence obligations (refer: 14-226MR)
Last updated: 30/03/2021 09:38