ASIC bans Forex CT five over high-risk trading

The corporate regulator has swung the hammer at a Wolf of Wall Street-style high-risk ­financial investments and exchange business.

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The corporate regulator has swung the hammer at the director and four employees of a “Wolf of Wall Street”-style high-risk ­financial investments and exchange business.

Forex Capital Trading was in the sights of the Australian Securities & Investments Commission after its gong-ringing, heavy-handed selling tactics landed it before the regulator.

ASIC banned Forex CT from operating in May last year after complaints in the rapidly growing retail derivatives space reached the regulator.

The regulator was so concerned it banned Forex CT director and CEO Shlomo Yoshai for 10 years after finding he seriously breached and disregarded financial services compliance.

ASIC highlighted how Mr Yoshai had created a culture on the trading floor whereby a gong or bell was rung when client’s deposited funds of certain amounts into trading accounts.

Mr Yoshai was found to have created a high-pressure work environment and failed to ensure arrangements for managing conflicts of interest.

Account managers were found to have engaged in incentive games, such as a wheel of fortune, roulette tables and dice games to win cash if certain client deposits were met.

ASIC found concerning behaviour, including a commission structure that entitled team ­leaders and account managers to a percentage of a client’s net ­deposits.

The regulator found Mr Yoshai pressured account managers to implement high sales tactics when engaging with clients, including offering incentives to encourage deposits but also pressuring clients to delay or cancel attempts at withdrawals.

Forex CT was found to have recommended trading strategies that would increase a client’s exposure to the market and therefore potential losses.

The regulator also banned former team leaders Jarrod Popuard for six years and Benjamin Esler for 4½ years. ASIC found the two contributed to fostering the intense sales culture at Forex CT and failed to comply with financial services laws.

Mr Popuard was found to have made misleading representations to clients of Forex CT, while Mr Esler put pressure on clients to deposit funds into trading accounts and delay or cancel their withdrawals to ensure his own remuneration would be boosted.

The regulator found this amounted to unconscionable conduct.

The two were also found to have told teams to delay or prevent clients from withdrawing money and used incentives such as credits and adopted various high pressure sales tactics to maximise client deposits.

ASIC also banned former account managers Huy Minh, Hoang for five years and Andrew Tran for three years.

The regulator found both men were involved in unfair practices, including offering valueless incentives and delaying attempts by clients to withdraw funds.

The men were found to have misleading representations to clients, including falsely stating that clients would make profits with Forex CT.

The men were also found to have lied to clients by telling them they “did not obtain any benefit from clients depositing funds into their trading account” when in fact they did.

ASIC also found Mr Hoang had given personal financial advice to clients while failing to understand the nature of the financial products he was offering.