CFDs on Trial: IC Markets Faces Class-Action Lawsuit in Australia

by Arnab Shome
  • The lawsuit alleged unconscionable conduct and misleading and deceptive conduct by the broker.
  • The broker is now facing two class-action lawsuits in the country.
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International Capital Markets, trading as IC Markets, is facing a class-action lawsuit brought by Piper Alderman for selling contracts for differences (CFDs) instruments to retail investors. It was the second such class-action lawsuit faced by the Sydney-based broker.

Piper Alderman’s lawsuit represents “everyday Australian investors who have collectively lost hundreds of millions of dollars trading controversial financial products called [CFDs].”

CFDs Are Risky, but Legal

CFDs are leveraged derivative instruments that are considered risky for retail investors. However, such instruments are legal in Australia, and the brokers, including IC Markets, offering them are regulated by the Australian Securities and Investment Commission.

The class-action lawsuit brings allegations of “unconscionable conduct and misleading and deceptive conduct” against the broker between September 2017 and March 2021. It highlighted that “investors suffered losses in circumstances where IC Markets did not adequately assess their objectives, financial situations and where the risks of investing were inadequately disclosed.”

Piper Alderman brought the class-action lawsuit against IC Markets after commencing a potential investigation last October. The lawsuit is being funded by United Kingdom-based Woodsford, also backing a similar class-action lawsuit against IG Markets.

“Woodsford is committed to backing this action against IC Markets on behalf of those people who have suffered loss trading these excessively risky and complex products,” said Woodsford’s Chief Investment Officer, Charlie Morris.

With the class-action, Piper Alderman is seeking to provide a remedy and recover losses for the retail investors involved.

“Piper Alderman is pleased to have commenced this class-action on behalf of everyday Australian retail investors, many of whom have suffered significant financial losses and distress as a result of being offered highly leveraged CFDs when they had little or no experience in trading complex financial products,” Piper Alderman’s Partner, Kate Sambrook, said.

A spokesperson from IC Markets told Finance Magnates: "The claims in the case brought against IC Markets are entirely meritless, and will be vigorously defended. Our CFD products have consistently complied with all regulations, and we pride ourselves on providing efficient, honest and fair services to our clients. This case is simply the latest in a series of copy-cat class actions against, it seems, any and all CFD brokers in Australia, driven by plaintiffs’ lawyers and litigation funders. It has absolutely no bearing on our current operations and will have no impact on our clients or our broader business.

Aussie Law Firms Hitting CFDs Brokers

The first class-action lawsuit against IC Markets was filed in December by Echo Law. The allegations against the broker in both lawsuits are similar.

Last May, Piper Alderman filed a class-action lawsuit against IG Markets, alleging the marketing of CFDs to inexperienced traders without any safeguards. The law firm Willian Roberts also brought a class-action lawsuit against IG Markets, and later, the two lawsuits against the broker were consolidated. Sydney-based Banton Group is also investigating against IG Markets.

Plus500 and CMC Markets are two other brokers facing class-action lawsuits in Australia for offering CFDs.

International Capital Markets, trading as IC Markets, is facing a class-action lawsuit brought by Piper Alderman for selling contracts for differences (CFDs) instruments to retail investors. It was the second such class-action lawsuit faced by the Sydney-based broker.

Piper Alderman’s lawsuit represents “everyday Australian investors who have collectively lost hundreds of millions of dollars trading controversial financial products called [CFDs].”

CFDs Are Risky, but Legal

CFDs are leveraged derivative instruments that are considered risky for retail investors. However, such instruments are legal in Australia, and the brokers, including IC Markets, offering them are regulated by the Australian Securities and Investment Commission.

The class-action lawsuit brings allegations of “unconscionable conduct and misleading and deceptive conduct” against the broker between September 2017 and March 2021. It highlighted that “investors suffered losses in circumstances where IC Markets did not adequately assess their objectives, financial situations and where the risks of investing were inadequately disclosed.”

Piper Alderman brought the class-action lawsuit against IC Markets after commencing a potential investigation last October. The lawsuit is being funded by United Kingdom-based Woodsford, also backing a similar class-action lawsuit against IG Markets.

“Woodsford is committed to backing this action against IC Markets on behalf of those people who have suffered loss trading these excessively risky and complex products,” said Woodsford’s Chief Investment Officer, Charlie Morris.

With the class-action, Piper Alderman is seeking to provide a remedy and recover losses for the retail investors involved.

“Piper Alderman is pleased to have commenced this class-action on behalf of everyday Australian retail investors, many of whom have suffered significant financial losses and distress as a result of being offered highly leveraged CFDs when they had little or no experience in trading complex financial products,” Piper Alderman’s Partner, Kate Sambrook, said.

A spokesperson from IC Markets told Finance Magnates: "The claims in the case brought against IC Markets are entirely meritless, and will be vigorously defended. Our CFD products have consistently complied with all regulations, and we pride ourselves on providing efficient, honest and fair services to our clients. This case is simply the latest in a series of copy-cat class actions against, it seems, any and all CFD brokers in Australia, driven by plaintiffs’ lawyers and litigation funders. It has absolutely no bearing on our current operations and will have no impact on our clients or our broader business.

Aussie Law Firms Hitting CFDs Brokers

The first class-action lawsuit against IC Markets was filed in December by Echo Law. The allegations against the broker in both lawsuits are similar.

Last May, Piper Alderman filed a class-action lawsuit against IG Markets, alleging the marketing of CFDs to inexperienced traders without any safeguards. The law firm Willian Roberts also brought a class-action lawsuit against IG Markets, and later, the two lawsuits against the broker were consolidated. Sydney-based Banton Group is also investigating against IG Markets.

Plus500 and CMC Markets are two other brokers facing class-action lawsuits in Australia for offering CFDs.

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