Following an ASIC investigation, over-the-counter (OTC) derivatives provider Sirius Financial Markets Pty Ltd, trading as ‘Trade360’, has surrendered its Australian financial services license.
ASIC also prohibited two of Sirius Financial’s former executives, Mr. Jonathan Schneider and Mr. Oskar Pecyna, from controlling an entity that engages in financial services or from exercising any leadership or management role in relation to a financial services company for eight years.
ASIC Commissioner Danielle Press said: “ASIC’s investigation revealed consumer losses related to CFD trading, including an investor from Sirius Financial, who had limited knowledge of the market, losing over $400,000 after learning that CFDs were a safe investment.”
Sirius Financial has engaged an offshore call centre, Toyga Media Ltd (Toyga), to find clients to trade high risk contracts for difference (CFDs) and foreign exchange contracts on margin issued by Sirius Financial. ASIC investigation found call center representatives persuaded Sirius Financial customers to trade using high pressure selling tactics and provided customers with personal advice when Sirius Financial was not authorized to do it. Sirius Financial was also found to have engaged in objectionable conduct and conduct likely to mislead or deceive.
ASIC’s investigation also found that by failing to take adequate steps to address Toyga’s conduct, Sirius Financial breached its license obligations to:
- do all that is necessary to ensure that the financial services covered by the license are provided in an efficient, honest and fair manner
- take reasonable steps to ensure that its representatives comply with financial services laws
- have put in place appropriate systems for managing conflicts of interest.
In banning Mr. Pecyna and Mr. Schneider, ASIC found that the two men were involved in Sirius Financial’s failures to comply with its licensing obligations and were not sufficiently trained or competent to be involved in the control of a financial services company. In reaching these conclusions, ASIC found that the two men had failed to properly fulfill their duties as responsible managers and lacked the professionalism, integrity, judgment and diligence necessary to play a role in the management or control of a financial services provider.
Also following ASIC’s investigation, Sirius Financial will relinquish its license and cease retail and wholesale operations and cease providing financial services on July 29, 2022.
The banning of Mr. Pecyna and Mr. Schneider is recorded in ASIC’s list of banned and disqualified persons.
ASIC has already taken action against OTC derivatives providers, resulting in sanctions handed down by the Federal Court. AGM Markets was fined $75 million (20-246MR) and Forex CT was fined $20 million (21-120MR) for various breaches of company law, including including unreasonable conduct.
Product Action Order
On April 5, 2022, ASIC extended for five years, until May 23, 2027, its Product Intervention Order imposing conditions on the issuance and distribution of CFDs. The product intervention strengthened protections by reducing the leverage of CFDs available to retail clients and targeting features and sales practices that amplify retail clients’ CFD losses.
The Product Intervention Order came into effect on March 29, 2021 after ASIC reviews in 2017, 2019 and 2020 found that most retail clients lose money trading CFDs. The order imposes restrictions on CFDs issued to retail clients, including:
- leverage ratio limits ranging from 30:1 to 2:1
- standardization of margin closing rules
- negative balance protection
- prohibition on offering or giving certain inducements