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17-391MR ASIC takes further action in Allianz Metro binary option trading investigation
ASIC has sought final orders in ongoing Federal Court proceedings against a number of international and Australian companies and associated individuals that it alleges are involved in operating binary trading websites (www.titantrade.com and https://tradettn.com) (the Websites) and offering of binary trading services to Australian customers.
In July 2016, ASIC previously successfully applied for orders in the Federal Court proceedings to have the operators of the Websites and associated companies and individuals restrained from carrying on a financial services business. Orders were also granted to freeze funds after ASIC identified that Australian users of the Website had deposited funds into an Australian bank account operated by Allianz Metro Pty Ltd (Allianz Metro).
ASIC alleges that One Tech Media Limited (OTML) (based in the Seychelles and later in the Marshall Islands) and Ultra Solutions MG (UK) Ltd (USMG) (based in the United Kingdom), offered binary options trading on the Websites to customers in Australia at various times during 2016 without holding an Australian financial services licence (AFSL).
In addition, ASIC alleges that OTML and USMG, through their brokers, misled and deceived Australian customers of the Websites by making false or misleading statements and representations, including that:
- binary option trading would generate large profits and returns;
- they were licensed and had expertise in trading; and
- they would act in the customer's best interests.
ASIC also alleges that OTML and USMG engaged in unconscionable conduct by:
- not properly disclosing the risks faced;
- inducing customers to place larger deposits;
- failing to inform customers that initial wins and bonuses were only credited to non-existent accounts;
- encouraging retired and unemployed customers to access superannuation, credit or a second mortgage in order to trade in binary options;
- conducting unauthorised trades that ultimately made losses; and
- refusing requests by customers to withdraw funds or cancel trades.
ASIC further alleges that Allianz Metro Pty Ltd, Transcomm Global Pty Ltd, Sansen Pty Ltd, IMC Holdings Pty Ltd and Eustace and Cameron Senese and Yoav Ida (all Australian companies and/or individuals) arranged for OTML and USMG to issue binary options to Australian customers of the Websites without holding an AFSL, and without providing a product disclosure statement.
ASIC seeks final relief from the Court in relation to the above allegations including declarations from the Federal Court there was various contraventions of the Corporations Act and the Australian Securities and Investments Commission Act (ASIC Act), orders restraining each of the companies and individuals from conducting a financial services business, pecuniary penalties against OTML and USMG for alleged unconscionable conduct, and disqualification orders against Eustace and Cameron Senese and Yoav Ida from managing corporations in the future.
The maximum pecuniary penalty OTML and USMG face for a breach of the unconscionable conduct provisions in the proceedings is $1.8 million (being the applicable penalty rate that applied at the relevant time of the alleged breach in 2016).
The proceeding has been listed for a further case management hearing in the Federal Court in Melbourne on 23 March 2018, at which time it is anticipated a final hearing date will be set by the Court.
- Sealed Concise Statement dated 21 September 2017
- Sealed Interlocutory Application dated 21 September 2017
In Aug 2016, ASIC issued a Public Warning Notice in relation to Titantrade (refer: 16-246MR).
On various occasions since July 2016, the Court has allowed the defendants to use some of the frozen funds to cover living and legal expenses. The freezing orders were not continued on 31 August 2017 due to the depletion of funds.
In May 2017, ASIC filed contempt charges against certain defendants and Kalus Kenny Intelex (Melbourne based law firm) in the proceedings alleging that they had each breached previous orders prohibiting the first to the eleventh defendant from dealing with any of their assets or property (refer: 17-176MR).
ASIC action regarding binary option trading
ASIC has been active in targeting unlicensed binary option providers who generally operate in the retail OTC derivative space.
Recent outcomes obtained by ASIC in relation to binary option trading are below:
- Operators of 'binary options trading boiler room' convicted and sentenced (refer: 17-378MR)
- ASIC targets unlicensed binary option mobile apps (refer: 17-257MR)
- ASIC crackdown on unlicensed retail OTC derivative providers (refer: 16-218MR)
- ASIC warns investors about dealing with GOptions, Porterfinance, Boss Capital, Maxoptions, Bloombex Options, Citrades, RBoptions and OptionsXO (refer: 16-189MR)
- ASIC warns investors about services advertised by Top Ten Binary Brokers also known as Top 10 Binary brokers.com (refer: 16-142MR)
Consumers who want further information about binary option trading can visit ASIC's MoneySmart website.
You can check to see whether an entity is licensed through ASIC's Professional Registers using the ASIC Connect search facility on ASIC's website.
Following a case management hearing on 18 May 2018, the matter will return to Court on 26 April 2019 for a six-day contested hearing*.
Editor's note 2:
On 19 July 2018, the Federal Court handed down judgment in the contempt application brought by ASIC. The Court dismissed all charges against Melbourne based law firm Kalus Kenny Intelex.
The Court held that Eustace Senese (Eustace) , Cameron Senese (Cameron) and Transcomm Global Pty Ltd (Transcomm) were guilty of contempt after they accessed and used other funds during August 2016 and February 2017 without authorisation of the Court.
*Editor's note 3:
Following a case management hearing on 5 April 2019, the matter will now return to Court on 29 April 2019 for a three-day contested hearing.
Editor's note 4:
The contested hearing concluded on 1 May 2019. Justice Davies
reserved her judgment.