ASIC-regulated Union Standard Group Forex (USGFX) has a situation on its hands, with a group of rogue investors holding employees of the Australian brokerage hostage. A group of investors have been holding three employees in a Shanghai office for nearly five days after losing money on foreign exchange (FX) trades, according to an FT report.
The hostage situation is the culmination of roughly $2.6 million in losses via multiple FX trades last week. A group of upwards of fifty investors stormed USGFX’s Shanghai office as an act of reprisal. Initially, twenty staff were held hostage last Wednesday as a bargaining chip to recoup their financial losses, though seventeen of the twenty hostages were let go.
It’s a very strange and bizarre situation. We’re hoping for the best
The remaining three hostages appear to be in good condition, and are being provided with food and water regularly – however one individual appears to have received minor injuries. The situation is unprecedented, notably for USGFX, which is working with local authorities to find a quick resolution. USGFX did not elaborate on the nature of the FX trades with the exception of confirming the total losses, estimated at around $2.6 million.
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Justin Pooni, Marketing Manager for USGFX, commented to the FT: “It’s a very strange and bizarre situation. We’re hoping for the best.”
Unfortunately, the latest episode represents a new low for the domestic financial industry that had shown many signs in recent months of maturing into a more fluid and welcoming environment. Chinese investors, not unlike their European and other APAC counterparts, harbor a penchant for high-risk financial instruments.
The staunch backlash from the cohort of investors is however anything but common. They have taken matters into their own hand to recoup their losses, although allegations of fraud against USGFX were summarily shot down by the company. For the Australian Securities and Investment Commission (ASIC) regulated brokerage, this is certainly its most trying crisis to date. The group has vehemently denied any wrongdoing in the episode, which runs counter to several local media reports alleging the defrauding of investors.
The hostage takers want to secure full compensation, a stance that the firm has refused to honor. According to a recent statement on WeChat from the brokerage: “We have given the agent and clients a detailed explanation but they have rejected USGFX’s explanations. USGFX will not accept, nor compromise.”
Finance Magnates reached out to USGFX, but company representatives were unavailable for comment.