Australia Court Slaps over $53 Million Fine on AGM Markets, Others

The Federal Court of Australia has slapped a total pecuniary fine of AUD75 million (around $53.19 million) on three companies: AGM Markets Pty Ltd (AGM), OT Markets Pty Ltd (OTM), and Ozifin Tech Pty Ltd (Ozifin), in an order on Friday, propagating a strong message to the brokers.

The fine was in connection to a court battle between the brokers and the Australian Securities and Investments Commission (ASIC ASIC The Australian Securities and Investments Commission (ASIC) is the prime regulator in Australia for corporate, markets, financial services, and consumer credit. It is empowered under the financial service laws to facilitate, regulate, and enforce Australian financial laws. The Australian Commission was set up and is administered under the Australian Securities and Investment Commission Act of 2001. ASIC was initially the Australian Securities Commission based on the 1989 ASC Act. Initially, the The Australian Securities and Investments Commission (ASIC) is the prime regulator in Australia for corporate, markets, financial services, and consumer credit. It is empowered under the financial service laws to facilitate, regulate, and enforce Australian financial laws. The Australian Commission was set up and is administered under the Australian Securities and Investment Commission Act of 2001. ASIC was initially the Australian Securities Commission based on the 1989 ASC Act. Initially, the Read this Term), who started investigating the companies after it received a large number of complaints from retail investors.

Last February, the court sided with the regulator, blaming the companies for their engagement in ‘systemic unconscionable conduct’ in selling over-the-counter (OTC) derivatives products. Investors of these companies lost around AUD32 million (~$22.7 million).

ASIC first moved against these companies in February 2018 and canceled AGM’s license later that year.

“The serious nature of the contraventions and the need to send a clear message to the limited number of licensees who are dealing in OTC derivatives justifies high penalties,” the judge stated in the order.

Fines Will Send a Message

AGM was ordered to pay AUM35 million (~24.8 million), while the other two have to pay AUD20 million (~14.19 million) each.

“The overall penalty for AGM be higher than that for OTM and Ozifin, reflecting the failure by AGM to discharge its Obligations Obligations In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you Read this Term as the holder of an AFSL,” the judge noted. “Such a penalty will stand as a deterrent to other AFSL holders, particularly those who are participants in the OTC derivatives market, from failing properly to supervise the conduct of their authorized representatives.”

All three companies will have to initiate a refund process to the affected 10,000 trading clients. The court also appointed liquidators for all three companies.

“The retail OTC derivatives sector remains a focus for ASIC, given misconduct identified across the sector,” ASIC deputy chair, Daniel Crennan QC said. “AGM, OTM, and Ozifin engaged in systemic unconscionable conduct, targeting unsophisticated investors and harming vulnerable consumers. The penalties handed down demonstrate the serious consequences for firms who engage in this sort of misconduct.”