Discretionary CFD Broker Terminated by ASIC, Director Banned for Second Time

The Australian Securities and Investments Commission (ASIC) has announced the decision to terminate the financial services license belonging to Shore Capital Pty Ltd, trading under the name Coast Capital. The broker's main line of business is offering CFD trading services and trading on clients behalf in a discretionary capacity.

The company's owner, Mr. Scott Logan, was banned from providing financial services for seven years after the ASIC investigation found that he had breached numerous financial services laws as a director and sole employee of Shore Capital.

This is not the first time Mr. Logan has been sanctioned by the Australian financial regulator. Mr. Logan was formerly an authorized representative of Romad Financial Services Pty Ltd (Romad) from June 25, 2011 to October 21, 2011. Romad's AFS licence was cancelled by ASIC on October 21, 2011. Shore Capital's AFS licence was cancelled on October 16, 2014 and no longer operates a financial services business.

In addition, earlier this month Mr. Logan was disqualified from acting as an investment manager or custodian of a superannuation entirety by the Australian Tax Office (ATO). Via a disqualificaiton order, the Deputy Commissioner of Taxation, Alison Lendon, made the decision stating that Mr. Logan is "not a fit and proper person to be a trustee."

ASIC's Investigation

The investigation focused on the period between April 2011 and June 2013 when Shore Capital was alleged to have been trading in CFD contracts on behalf of retail clients when it was not authorized to do so. Shore Capital initially traded on behalf of retail clients without holding an Australian financial services (AFS) licence. It later traded on behalf of retail clients when it held an AFS licence for the provision of services to wholesale customers only.

On an individual level, ASIC accuses Mr. Logan of making "numerous false or misleading representations to Shore Capital clients," such as falsely claiming ASIC authorization and charging inappropriate fees. ASIC says that at least three clients lost a combined total of over $38,000 as part of trading activities carried out by Shore Capital.

ASIC Deputy Chairman, Peter Kell said, 'The investing public needs to be able to trust those who provide financial services. ASIC will act to ensure those who behave without regard to their Obligations Obligations In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you Read this Term to their clients will be removed from the financial services industry."

Mr. Logan and Shore Capital have a right of appeal to the Administrative Appeals Tribunal for a review of ASIC’s decisions.

ASIC Warns against YouTradeFX

In a separate case involving a different margin foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term broker, ASIC today cautioned Australian investors against dealing with the company or group, YoutradeFX.

ASIC advises that YoutradeFX is not regulated by ASIC, nor is it licensed to trade in margin FX in Australia, as has been revealed by several websites that review and comment upon FX trading.

The company previously known as Youtrade Capital Markets Australia Pty Ltd is now known as Golden Sky Australia Pty Ltd and holds an Australian financial services (AFS) licence. The company was previously associated with the YoutradeFX group, however, since July 2014 and following inquiries by ASIC, it has not been part of YoutradeFX, provided FX trading or contracts for difference (CFDs), or operated under the name Youtrade Capital Markets Australia Pty Ltd.

ASIC urges all investors considering trading in margin FX to check that they are dealing with a licensed entity, or authorized through an AFS holder and regulated by ASIC.

This can be done by searching the Professional registers on the ASIC website.