ASIC accepts EU from online FX broker
The Australian Securities and Investments Commission (ASIC) has accepted an enforceable undertaking from an online foreign exchange broker after it violated managed discretionary account (MDA) rules.
The corporate regulator's investigation found that between March 2010 and October 2011, Forex Financial Services (Forex FS) offered an individually managed account (IMA), which was an MDA.
Forex FS' Australian financial services (AFS) licence bans it from offering an MDA service to retail clients except through a registered managed investment scheme.
It found the IMAs, which were opened by 34 clients and had funds totalling more than $2.6 million, were not run this way.
"An MDA service allows a broker to enter and exit trades on behalf of a client without seeking the client's approval," ASIC commissioner Greg Tanzer said.
"Consumers can face significant loss if the service is not provided appropriately."
ASIC also found Forex FS made claims on its website that were misleading or deceptive to clients. This included promising target returns of over 30 per cent per annum for certain products based on their past performance, including the IMAs.
Under the enforceable undertaking Forex FS cannot offer MDA services to retail clients for 10 years.
They also have to get an independent compliance expert to assess their products and services, and take appropriate action.
AUTHOR
Malavika Santhebennur
Recommended for you
High-net-worth advisers seeking to grow their businesses are likely to find alternatives to be a key part of the puzzle amid investor demand, according to Praemium’s head of private wealth.
The financial advice profession has lifted back above the 15,500 mark this week thanks to a double-digit net rise in adviser numbers, according to Wealth Data.
A closer watch on licensees that fall short on cyber security protections is among a dozen new enforcement priorities announced by the corporate regulator for 2025.
Research house Morningstar has welcomed a new director for manager research to cover Australian and New Zealand fund managers.
