Financial scammers fined $75m

The federal court has hit three companies with fines totalling $75m for scamming millions of dollars from “unsophisticated and unwary” retail investors.

The federal court has hit three companies with fines totalling $75m for scamming millions of dollars from “unsophisticated and unwary” retail investors.

The federal court has hit three companies with fines totalling $75m for scamming millions of dollars from “unsophisticated and unwary” retail investors through the offer of risky over-the-counter derivative products, or “financial heroin hits”.

Justice David Beach handed down the fine to the three companies — AGM Markets, OT Markets and Ozifin Tech yesterday, closing the book on an Australian Securities and Investment Commission investigation, which began when it received consumer complaints about high-pressure sales tactics from company representatives.

The court earlier found that the trio had engaged in unconscionable conduct by encouraging company representatives — who were often based offshore — to provide unlicensed financial advice that was not in the best interests of the customers.

Justice Beach said this advice took the form of aggressively encouraging customers to invest in margin call contracts, binary options and contracts for difference — so called “derivative” trading products that cause “significant detriment” to most retail investors due to their complexity, high risk, and addictive qualities.

“The present case before me is a classic example of unsophisticated retail investors seeking such financial heroin hits,” Justice Beach remarked in his judgment, also noting that every interaction of company representatives with clients was to increase deposits and trades “ultimately for those clients to lose their funds”.

On one occasion account managers at OT Markets were instructed to “kill their customers” and paid commission to managers based on the number of deposits they were able to secure from customers.

“None of the defendants’ clients were acquiring CFDs for hedging purposes,” Justice Beach said. “They were unsophisticated and ill-informed speculators.

“As a result of the contravening conduct, clients of each of the three defendants lost significant amounts of money.

“And as a direct consequence, each of the three defendants earned significant profits.”

AGM Markets was fined $35m, while OT Markets and Ozifin Tech were fined $20m.

AGM’s former director Yossef Ashkenazi was banned from providing financial services by ASIC for eight years in 2018.

The court also ordered the companies, which have been placed in liquidation, to offer partial refunds to affected clients.