Australian Federal Court Sides with ASIC Against Broker Gallop
- The proposed civil penalty against former director Ming-Chien Wang will be the highest in an ASIC proceeding.
The Australian Securities and Investments Commission (ASIC) announced this Thursday that the Federal Court of Australia has delivered judgment in the regulator’s favor in proceedings against Gallop International Group Pty Ltd (GIG), which is in liquidation, Gallop Asset Management Pty Ltd (GAM), Stumac Pty Ltd and former director Ming-Chien Wang.
GIG and GAM jointly operated the Gallop business, and each held an Australian Financial Services (AFS) license. The company provided trading services for a range of financial product, including 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 (Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term), precious metals, derivatives, and contracts for differences (CFDs).
Currently, the court has proposed the following orders: declarations of contraventions of financial services laws by GIG, declarations that Wang was knowingly concerned in the contraventions of GIG, permanent injunctions restraining Wang from carrying on a financial services business, an order disqualifying Wang from managing a corporation for 10 years, an order that Wang pay a civil penalty of $3 million, and the winding up of GAM and Stumac.
Justice Charlesworth has given the defendants time to apply to the Court about the proposed orders. If there is no application, then the Court will make the proposed orders on September 26, 2019.
According to the statement from the Aussie regulator, the proposed civil penalty against Wang will be the highest civil penalty in an ASIC proceeding awarded against an individual.
Background on ASIC vs. Gallop
Previously, ASIC had already obtained interim junctions against the companies and Wang, which allowed the regulator to effectively close down the Gallop business. The watchdog also received junctions to freeze orders over Australian bank accounts.
The proceedings follow on from clients of Gallop, which were predominately residents of mainland China and Taiwan, complaining to the authority that the company was withholding their investment funds and in some cases earnings from investments.
ASIC found that between May 2016 and May 2017, more than AU$36 million was deposited into GIG’s Australian bank account. Most of this money came from investors. During this period, the majority of the money was withdrawn and transferred to overseas bank accounts which were held by entities related to GIG or otherwise having connections with Wang.
GIG was operating without an AFS license
The Federal Court of Australia found that GIG was operating a financial services business without holding the appropriate license. The Justice also found that the company made false and misleading statements and engaged in deceptive conduct.
“Charlesworth J also found that Mr Wang, being the controlling mind and architect of the scheme, was knowingly concerned in GIG’s contraventions., and that GIG was in the process of transitioning its business to Stumac,” the statement from ASIC said.
Charlesworth J also found that: “a large number of investors have lost the whole of their capital invested and that they have been unsuccessful in obtaining a satisfactory explanation from GIG as to those losses”, that “It is more likely than not that the funds were misapplied, so explaining the magnitude of the losses”, and that Wang “demonstrates the utmost disregard for Australia’s financial services laws.”
The Australian Securities and Investments Commission (ASIC) announced this Thursday that the Federal Court of Australia has delivered judgment in the regulator’s favor in proceedings against Gallop International Group Pty Ltd (GIG), which is in liquidation, Gallop Asset Management Pty Ltd (GAM), Stumac Pty Ltd and former director Ming-Chien Wang.
GIG and GAM jointly operated the Gallop business, and each held an Australian Financial Services (AFS) license. The company provided trading services for a range of financial product, including 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 (Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term), precious metals, derivatives, and contracts for differences (CFDs).
Currently, the court has proposed the following orders: declarations of contraventions of financial services laws by GIG, declarations that Wang was knowingly concerned in the contraventions of GIG, permanent injunctions restraining Wang from carrying on a financial services business, an order disqualifying Wang from managing a corporation for 10 years, an order that Wang pay a civil penalty of $3 million, and the winding up of GAM and Stumac.
Justice Charlesworth has given the defendants time to apply to the Court about the proposed orders. If there is no application, then the Court will make the proposed orders on September 26, 2019.
According to the statement from the Aussie regulator, the proposed civil penalty against Wang will be the highest civil penalty in an ASIC proceeding awarded against an individual.
Background on ASIC vs. Gallop
Previously, ASIC had already obtained interim junctions against the companies and Wang, which allowed the regulator to effectively close down the Gallop business. The watchdog also received junctions to freeze orders over Australian bank accounts.
The proceedings follow on from clients of Gallop, which were predominately residents of mainland China and Taiwan, complaining to the authority that the company was withholding their investment funds and in some cases earnings from investments.
ASIC found that between May 2016 and May 2017, more than AU$36 million was deposited into GIG’s Australian bank account. Most of this money came from investors. During this period, the majority of the money was withdrawn and transferred to overseas bank accounts which were held by entities related to GIG or otherwise having connections with Wang.
GIG was operating without an AFS license
The Federal Court of Australia found that GIG was operating a financial services business without holding the appropriate license. The Justice also found that the company made false and misleading statements and engaged in deceptive conduct.
“Charlesworth J also found that Mr Wang, being the controlling mind and architect of the scheme, was knowingly concerned in GIG’s contraventions., and that GIG was in the process of transitioning its business to Stumac,” the statement from ASIC said.
Charlesworth J also found that: “a large number of investors have lost the whole of their capital invested and that they have been unsuccessful in obtaining a satisfactory explanation from GIG as to those losses”, that “It is more likely than not that the funds were misapplied, so explaining the magnitude of the losses”, and that Wang “demonstrates the utmost disregard for Australia’s financial services laws.”