The Australian Securities and Investments Commission (ASIC) today announces that it has banned Forex Capital Trading (Forex CT) chief executive officer, responsible manager and sole director, Shlomo Yoshai, for ten years.
The regulator has determined that Mr Yoshai’s lack of understanding or regard for compliance was so serious it justified the making of the banning period for such a significant period, particularly given he was someone who oversaw the operations of Forex CT.
ASIC notes that Forex CT employed account managers who encouraged clients to trade in high-risk CFDs and margin FX contracts.
Mr Yoshai was found to have been involved in Forex CT’s breaches of the Corporations Act, which included:
- failing to do all things necessary to ensure the financial services are provided efficiently, honestly and fairly; and
- failing to have in place adequate arrangements for the management of conflicts of interest. This included Forex CT’s commission structure which entitled team leaders and account managers to a percentage of client “net deposits” (deposits less withdrawals).
Mr Yoshai put pressure on account managers to:
- implement high pressure sales tactics when engaging with clients;
- offer incentives to clients to encourage deposits;
- recommend trading strategies that would increase a client’s exposure to the market;
- pressure clients to deposit funds into their trading accounts; and
- pressure clients to delay or cancel withdrawal requests.
ASIC has also banned former team leaders Jarrod Popuard for six years and Benjamin Esler, for four-and-a-half years. ASIC found they contributed to fostering Forex CT’s high-pressure sales culture and did not comply with financial services laws. In the case of Mr Poupard, this included making misleading representations to clients of Forex CT. Mr Esler put pressure on Forex CT clients to deposit funds into their trading account and delay or cancel withdrawals in order to maximize his own remuneration that was based on ‘net deposits’.
In addition, ASIC banned former account managers Huy Minh (Andy) Hoang for five years and Andrew Tran for three years. The ASIC found both of them were involved in unfair practices, including encouraging client deposits, by offering valueless incentives and delaying client withdrawal requests. The ex-account managers also made misleading representations to their clients.
ASIC also found Mr Hoang gave personal advice to clients while not understanding the nature of the financial products about which he gave advice.
In making the banning orders, ASIC found all five men are not fit and proper persons to provide financial services.
Let’s recall that last year ASIC cancelled Forex CT’s Australian financial services (AFS) licence after finding the company’s financial services business model disregarded key AFS licensee obligations and resulted in unconscionable, misleading and deceptive conduct.
On 16 July 2020, ASIC commenced civil penalty proceedings in the Federal Court against Forex CT and Mr Yoshai.