Legal firm Piper Alderman has spent nearly four years putting up a valiant defence of CFDs – or “contracts-for-difference” – in a little case that’s been rat-holed away somewhere in the Federal Court against brokerage outfit Europe FX.
Merely mentioning CFDs, or the loathsome word “brokerage”, or name-dropping a defunct trading house of little note to anyone, does risk putting you, dear reader, into a deep REM, but just stick with us for a moment longer, if you will, for this here’s a tale of high hypocrisy with a whiff of legal skulduggery about it.
Market regulator ASIC brought a case against Europe FX in 2020 alleging that its CFD trades were basically unconscionable, plying as it were these risky products to unwitting customers who claimed to have been misled and deceived into buying them, thereby trading on margin and losing their shirts and pretty much forced to melt down the family silver to survive.
Maybe so. Nearly four years later the case grinds on, with judgment reserved and with Piper Alderman still bravely defending Europe FX against its use of CFDs, its conduct, the allegations of deceiving people – even going so far as to compare CFD trading and the concept of borrowing, broadly, during one argument, with a very long bow, to what a mortgage holder does with equity in an offset account. Yes, you read that correctly – it’s all safe! Safe as houses!
But it’s also downright confusing, because while Piper Alderman has fought hard from the CFD corner on behalf of Europe FX, it has also, simultaneously, been pursuing class-action suits against the big CFD purveyors like IG Markets and the Andrew Budzinski-backed IC Markets, Budzinski being a billionaire rich-lister living quietly offshore somewhere.
And attacking CFDs with some vigour, it seems. Here’s Piper Alderman partner Kate Sambrook, in December, attempting to whack IC Markets with the same arguments that were deployed against Europe FX (unconscionable conduct, misleading conduct, etc.) on behalf of PA’s clients, who lost money messing about with these speculative trades.
“Everyday Australian retail investors who had little or no experience in trading complex financial products should never be offered highly leverage CFDs without a proper assessment of their objectives, financial situation and without proper risk disclosure,” Sambrook said. “The class action seeks to provide a remedy and recover losses for those retail investors.”
It was Harry Truman who wisely said that one should never kick a fresh turd on a hot day, a saying that comes to mind here, although Sambrook, to be fair, wasn’t directly involved in the Europe FX matter, at least from what Margin Call can gather. Still, the point to be made is that PA will basically say anything depending on who’s paying.
And timely, too, this sudden rush of class actions targeting not only IC and IG but all the major brokers, these suits having been filed in the wake of ASIC’s momentous 2021 intervention to put guardrails around CFD trading and drastically reduce the leverage available to retail clients, the mooks in this space having been exposed to as much as 500 times their original outlay.
Intervening in this way also inevitably sent up a sparkling red flare to corporate ambulance chasers like Piper Alderman and their slime-trailing litigation funders, like Casl and Omni Bridgeway, all the lawyers now arguing that, hey, those trading losses amassed during the ostensibly free market CFD years ending 2021? They’re all sueable now.
This is why it’s no coincidence that the cases against both IC Markets and IG Markets start as far back as 2017 and end the very month that ASIC’s intervention was published. Trust us when we dub this a feeding frenzy – and not only among the lawyers. Even Casl and Omni Bridgeway – both linked to veteran funder John Walker – seem to be falling over themselves in the IC Markets case to claim a bigger slice of the funding pie for keeps.
Walker, by the way, co-founded Casl, which is funding Echo Law, which is repping aggrieved traders in the IC Markets case. But he’s also a co-founder of IMF Bentham, now known as Omni Bridgeway, which is funding Piper Alderman in the same matter.
No suggestion of anything untoward in that linkage at all, only that Walker’s in the novel position of having his old firm compete with his new one for the aforementioned portion of pastry. Piper Alderman, meanwhile, did not return a request for comment.
Medical skirmish gets pulses racing
Most lawyers will tell you their work doesn’t save lives, but a case starting on Monday could prove the exception.
‘The scapegoating of business has to stop’: literal alarm at corporate Oscars
Seats were in short supply at business’s equivalent of the Oscars, but the speeches didn’t miss and at least one big name couldn’t wait to hot-foot it out of there before the dessert plates were even cleared.