The Federal Court has found that One Tech Media Limited (OTML), Allianz Metro Pty Ltd, Eustace Senese and Yoav Ida breached the Corporations Act in relation to the pressure sale of binary options to Australian consumers.
OTML, based in the Seychelles and later in the Marshall Islands, offered binary options trading to customers in Australia through www.titantrade.com and https://tradettn.com (the Websites) without holding an Australian Financial Services Licence (AFSL). OTML also issued binary options without providing the necessary product disclosure statements.
Justice Davies found that OTML engaged in unconscionable conduct in relation to a financial product. Her Honour also found that OTML misled and deceived Australian customers by making several false or misleading statements and representations, and conducted itself dishonestly.
Justice Davies noted that, ‘the evidence revealed a deliberate deception of vulnerable people to trap them into parting with their money in a way that deprived them of any opportunity to recover it’.
Australian company Allianz Metro Pty Ltd along with Eustace Senese and Yoav Ida (the Australian Entities) were also found to have breached the Corporations Act by providing paying agency services to the financial services business conducted by OTML, thereby enabling OTML to collect funds from Australian customers of the Websites.
Due to their individual contributions, each of the Australian Entities arranged for OTML to issue binary options and thereby themselves conducted a financial services business without holding an AFSL.
Justice Davies also found that Mr Senese and Mr Ida had not issued the requisite product disclosure statement each time a binary option was issued by OTML.
‘This judgment provides much needed clarification as to what constitutes “arranging” in the context of someone arranging for another person to deal in a financial product,’ said ASIC Commissioner Danielle Press.
‘ASIC’s litigation has provided clarity to otherwise grey areas of the law. This is ultimately to the benefit of both ASIC, industry and most importantly, consumers,’ she said.
Five other Australian defendants – Bianco Pty Ltd, IMC Holdings Pty Ltd, Sansen Pty Ltd, Transcomm Global Pty Ltd and Cameron Senese – were found to have not contravened the Corporations Act. Allianz Metro Pty Ltd was found not to have provided a custodial or depository service.
ASIC will now seek:
- Orders that OTML pay civil penalties in relation to the Court’s declaration made; and
- Disqualification orders against the Eustace Senese and Yoav Ida.
A date for the hearing on penalty will be fixed by the Court.
View the Federal Court judgment here.
Binary options are a derivative within the meaning of the Corporations Act. Any company, whether based within Australia or otherwise, offering binary options trading to Australian customers, are required to hold an Australian Financial Services Licence. 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.
ASIC discontinued proceedings against another international company involved in the matter, Ultra Solutions MG (UK) Limited, as the company was dissolved in the UK in October 2017. ASIC had previously discontinued its proceedings against Sandra Senese.
ASIC also previously obtained findings of contempt and penalties against Eustace Senese, Cameron Senese and Transcomm Global Pty Ltd in separate contempt proceedings related to this matter (18-307MR).