The Australian Securities and Investments Commission (ASIC) is one of the most attractive regulators nowadays. The lucrative license in the land down under is providing brokers with a lot of flexibility. A licensed Australian brokerage called AGM Markets serves as an example how not to do business in the country.
The lack of leverage restrictions on CFDs for any asset classes and convenient access to clients in the Far East is an attractive proposition. But make no mistake, the ASIC is a tough financial regulator.
A story that has unfolded over the past several months shows how bad conduct can lead to a bad outcome. The Australian regulator has diligently engaged in shutting down the business of the company, but it didn’t stop there.
The AGM Markets Saga
It all started in early 2018 when the ASIC became concerned that several entities have been advising clients how to trade. Retail brokers in Australia are not allowed to offering personal advice to their customers, and the move on the part of AGM Markets was deemed as a misleading tactic.
After warning investors about the implications stemming from such conduct, ASIC took to court. The regulator obtained an interim order against AGM Markets which limited the company from taking any assets outside the country.
The company was also banned from selling any of its assets, and its bank accounts got frozen. The ASIC also won an order that forbade the Chief Executive Officer of AGM Markets, Yossef Ashkenazi from leaving the country.
After a couple of months in courts, the ASIC applied for the appointment of Receivers and Managers to AGM Markets. A provisional liquidator was also appointed.
Two brands associated with the company have also been through the same process: OT Markets and Ozifin. The firms were corporate authorized representatives (CARs) of AGM Markets. As of April, the company was forced to abandon the agreements.
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After several court hearings, the ASIC managed to proceed with a civil proceeding against the company in the Federal Court of Australia.
Unmanaged Conflicts of Interest
The firm’s license got canceled in early November after it was suspended since the proceedings against AGM Markets started. The ASIC cited “unconscionable conduct and unmanaged conflicts of interest.”
The firm’s business model has been singled out as illicit due to the provision of financial advice to clients. In addition, the Australia regulator found that the brokerage was misleading its clients and was acting deceptively.
The lack of adequate human resources to carry out supervisory arrangements and disregard for compliance complicated the matters for AGM Markets further.
Yossef Ashkenazi Ban
The former director of AGM Markets, Yossef Ashkenazi has been banned from providing financial services for eight years. The decision made by ASIC this week concludes the saga for now.
The Australia regulator has found that the management of AGM Markets, “involved core elements of unconscionability and unmanaged conflicts of interest and followed a business model that disregarded key conduct requirements.”
The regulator holds Ashkenazi responsible for the business misconduct carried out by the brokerage. He was deemed by the regulator as “likely to contravene a financial services law.”
In addition, the ASIC stated that Ashkenazi is not adequately trained, or is not competent, to provide a financial service or financial services.
The civil court case filed by ASIC against AGM Markets case is going to be heard on the 22nd of February 2019. A further hearing has been scheduled for the 24th of June 2019.