Following an ASIC investigation, over-the-counter (OTC) derivatives provider Sirius Financial Markets Pty Ltd, trading as ‘Trade360’, has surrendered its Australian Financial Services licence.
ASIC has also banned two of Sirius Financial’s former executives, Mr Jonathan Schneider and Mr Oskar Pecyna, from controlling an entity that carries on a financial services business or performing any executive or management role in relation to a financial services business for eight years.
ASIC Commissioner Danielle Press said, ‘ASIC’s investigation uncovered concerning consumer losses from trading in CFDs, including a Sirius Financial investor, who had limited knowledge of the market, losing over $400,000 after being told CFDs were a safe investment.’
Sirius Financial engaged an off-shore call centre, Toyga Media Ltd (Toyga), to source clients to trade in high-risk contracts-for-difference (CFDs) and margin foreign exchange contracts products issued by Sirius Financial. ASIC’s investigation found the call centre representatives persuaded Sirius Financial clients to trade using pressure selling tactics and provided clients with personal advice when Sirius Financial was not licenced to do so. Sirius Financial was also found to have engaged in unconscionable conduct and conduct that was likely to mislead or deceive.
ASIC’s investigation also found that, in failing to take adequate steps to address Toyga’s conduct, Sirius Financial has breached its licence obligations to:
- do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly
- take reasonable steps to ensure that its representatives comply with the financial services laws
- have in place adequate arrangements for the management of conflicts of interest.
In banning Mr Pecyna and Mr Schneider, ASIC found both men were involved in Sirius Financial’s breaches of its licence obligations and were not adequately trained or competent to be involved in the control of a financial services business. In reaching these findings, ASIC found that both men failed to adequately perform their duties as responsible managers and lacked the necessary professionalism, integrity, judgement and diligence to play a role in the management or control of a financial services provider.
Also following ASIC’s investigation, Sirius Financial will surrender its licence and wind down retail and wholesale operations and will cease providing financial services on 29 July 2022.
Mr Pecyna’s and Mr Schneider’s banning is recorded on ASIC’s Banned and Disqualified Persons Register.
ASIC has taken previous action against OTC derivates providers, which has resulted in penalties handed down by the Federal Court. AGM Markets was ordered to pay a $75 million penalty (20-246MR) and Forex CT ordered to pay a $20 million penalty (21-120MR) for various breaches of the Corporations Act, including unconscionable conduct.
Product Intervention Order
On 5 April 2022, ASIC extended its product intervention order imposing conditions on the issue and distribution of CFDs for a further five years to 23 May 2027. The product intervention has strengthened protections by reducing CFD leverage available to retail clients and by targeting product features and sales practices that amplify retail clients’ CFD losses.
The product intervention order came into effect on 29 March 2021 after ASIC reviews in 2017, 2019 and 2020 found that most retail clients lose money trading CFDs. The order imposes restrictions on CFDs issued to retail clients, including:
- leverage ratio limits ranging from 30:1 to 2:1
- standardisation of margin-close out rules
- negative balance protection
- prohibitions on offering or giving of certain inducements
Mr Jonathon Schneider and Mr Oscar Pecyna have lodged appeals with the AAT.