Between 1 January 2017 and 1 April 2019, Forex Capital Trading Pty Ltd (Forex CT), through its representatives, provided personal advice to eight retail clients in relation to complex leveraged financial products – namely foreign exchange contracts and contracts-for-difference. In doing so, Forex CT representatives breached some of the best interests obligations (the BIOs) contained in ss 961B, 961G and 961J of the Corporations Act 2001 (Cth) (Corporations Act). Further, Forex CT contravened s 961K(2) in each instance a representative contravened the BIOs and s 961L for failing to take reasonable steps to ensure that its representatives complied with the BIOs.
Forex CT also engaged in misleading or deceptive conduct and unconscionable conduct vis-a-vis the eight retail clients and an unconscionable conduct system by, among other things:
• facilitating and assisting clients to trade in derivative financial products without an adequate understanding of the products and the risks involved;
• encouraging and adopting high pressure sales tactics in order to maximise deposits and trading activity;
• creating bonus structures that were inherently designed to incentivise representatives to increase net deposits regardless of the interests of clients;
• providing inadequate and inappropriate training and guidance to representatives; and
• establishing a trading floor culture that was directed towards maximising trading volume and client deposits and not promoting a culture of compliance by Forex CT with its legal obligations under financial services laws.
Forex CT also failed to comply with the general obligations as an AFSL holder under s 912A of the Corporations Act.
Mr Yoshai, the sole Australian-based director and CEO of Forex CT was found to be directly involved in the matters comprising the unconscionable conduct system engaged in by Forex CT and also failed to exercise his powers and discharge his duties with a reasonable degree of care and diligence as required under s 180(1) of the Corporations Act.