Federal Court Sides with ASIC, Rules Against AGM Markets

The Federal Court of Australia has delivered its judgment against AGM Markets Pty Ltd, OT Markets Pty Ltd and Ozifin Tech Pty Ltd this week, ruling that the companies engaged in systemic unconscionable conduct while providing over-the-counter (OTC) derivative products to retail investors in Australia.
The three companies are currently in a court battle with the  (ASIC), who started investigating the companies after it received a large number of complaints from retail investors.

The Court found on Wednesday that investors within Australia had lost more than $30 million as a result of the unconscionable conduct. The Honourable Justice Beach, who ruled on the case, found that AGM Markets, , violated its Australian financial services (AFS) licensee obligations under s912A(1) of the Corporations Act to provide financial services “efficiently, honestly and fairly.”
The three companies, when dealing with retail investors in Australia, used account managers that were often located offshore. The court found that these account managers breached a number of rules.
Namely, the Court found that the account managers:

  • Provided personal advice to clients when the companies were not licensed to do so;
  • Provided advice that was not in the best interests of the companies’ clients; and
  • Made representations that were false, misleading or deceptive, including representations with respect to the risks of investing in derivative products, the risks to which funds deposited by clients into their trading accounts would be exposed to and the profits that clients were likely to generate from their trading. 
  • After assessing the actions of the account managers, the Court also found that the companies engaged in misleading and deceptive conduct provided unlicensed personal advice, and advice which was not in the best interests of their clients. 
  • ASIC cancelled AFS licence of AGM Markets in 2018
    As , ASIC cancelled the AFS licence of AGM back in 2018. At the time, the regulator said that the license was cancelled due to “unconscionable conduct and unmanaged conflicts of interest.”
    At this point, on the ruling from the Court has been given. A further hearing on penalty and relief is yet to be had, with the date still yet to be determined.

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