Losses from alleged rogue trading scheme blow out to $345 million

Losses from an Australian-based trading scheme that sponsored British football team Sheffield United have hit $345 million, marking it as one of the biggest broker collapses in years.

Liquidators to Union Standard International Group, known as USG or USGFX, are now working through a “substantial volume” of claims submitted by investors with the Australian Financial Complaints Authority over breaches by the allegedly rogue trading house.

Australian trading house Union Standard, or USGFX, were once the sponsors of English Premier League team Sheffield United. Credit: Getty

USG sold high risk financial betting products known as contracts for difference and was so successful it even signed a $100 million sponsorship deal with Sheffield United when the club was promoted to the English Premier League for the 2018-2019 season.

Liquidators from BRI Ferrier said in a report in April last year that they suspect “criminal elements” may have been involved in the group. BRI Ferrier has so far received claims from investors totalling $345 million but suspect more than $500 million may have been lost in the scheme by customers. The group’s handling of investor money was so poor it counted some investor funds as profits and paid $4.5 million in tax on those profits. Liquidators have since received a credit from the tax office for the company.

The size of the creditor claim means that USG eclipses those made against property investment scheme iProsperity ($325 million), online broker Halifax Investments ($200 million), stockbroker BBY ($64 million) and more than the suspected losses of investors in the schemes operated by accused fraudster Yossi Herzog ($100 million).

USG collapsed into administration in mid-2020 amid allegations it and its representatives, which operated the EuropeFX and Trade Fred trading websites, had acted unconscionably towards investors by using high-pressure sales tactics to encourage clients to deposit more money, open more positions or discourage clients from withdrawing funds.

Ahead of its collapse, The Age and The Sydney Morning Herald revealed sales representatives from the group were using fake Commonwealth Bank business cards and Commonwealth Bank logos on their marketing material to lure in investors. The Australian bank has no involvement in USG.

USG’s director at the time of its collapse into administration is a man from Myanmar with no links to Australia, while its shareholder appears to be based in Taiwan. In the weeks surrounding its collapse, unknown people believed by liquidators to be associated with USG encouraged many investors to transfer their money into a new company set up in Vanuatu.

Liquidators are now considering holding a public examination, though what shape that will take – given many witnesses are located overseas – is unclear.

“Our external investigators have made contact with certain individuals located in Taiwan, with the goal of conducting formal interviews regarding the company’s operations and key parties behind it. Conducting interviews in Myanmar is still proving to be difficult and our attempts are ongoing,” BRI Ferrier said in its minutes of a creditors’ meeting held late last year.

BRI Ferrier has also taken court action in the UK to recoup funds from the group’s British subsidiary USG UK which is the entity listed as Sheffield United’s former sponsors.

The corporate watchdog took civil action against the company and its representatives last year alleging they misled and deceived investors and acted unconscionably by using high pressure sales tactics.

Union Standard is also accused of illegally selling the high-risk betting products to people in China which has a strict ban on the products. In 2018, customers of USG in Shanghai took staff hostage claiming they had been unable to withdraw funds from their accounts.