Australia court hands out A$1.8Mln Binary Options fraud fine
A Federal Court in Australia has imposed a penalty of AUD $1.8m on a company called One Tech Media Ltd, and has permanently banned Eustace Senese from managing corporations and carrying on financial services businesses in the country.
On 17 June 2020, Justice Davies of the Federal Court of Australia delivered judgment regarding pecuniary penalties, disqualification orders and injunctions in a binary options case Australian regulator ASIC brought against One Tech Media Ltd (OTML), Allianz Metro Pty Ltd (Allianz Metro), Eustace Senese and Yoav Ida.
The judgment follows findings made by Justice Davies in February 2020 that OTML, Allianz Metro, Mr Senese and Mr Ida had breached the Corporations Act in relation to the pressure sale of binary options to Australian consumers.
OTML offered binary options to trading customers in Australia through websites in breach of the requirement to hold an Australian Financial Services Licence and failed to issue the necessary product disclosure statements.
Australian company Allianz Metro Pty Ltd, together with Eustace Senese and Yoav Ida, were also found to have breached the Corporations Act by providing paying agency services to OTML without an Australian Financial Services Licence. Additionally, Messrs Senese and Ida failed to issue the requisite PDS for each binary option trade conducted, in contravention of the Corporations Act.
Justice Davies noted OTML’s contravening conduct to be ‘systemic and deliberate, targeting and exploiting vulnerable people, causing them substantial long-term financial detriment through the loss of savings and superannuation used for binary options trading’, which losses were contributed to by both Mr Senese and Mr Ida.
The Court indicated it would make orders that:
- OTML be permanently restrained from carrying on a financial services business and pay a pecuniary penalty of $1.8 million;
- Allianz Metro be permanently restrained from carrying on a financial services business;
- Mr Senese be permanently disqualified from managing corporations and be permanently restrained from carrying on financial services businesses; and
- Mr Ida be disqualified from managing corporations for 15 years and restrained from carrying on financial services businesses for 15 years.
In its ruling, the court noted that Australia regulator ASIC argued at the trial that whilst there is no evidence that Eustace was aware that One Tech was operating an unlawful scheme which defrauded Australian investors, it was clear that he was astute to distance himself from the activities of the clients of his paying agency business and careful not to inquire into them. He repeatedly sought to minimise his conduct as being a “paying agent” only.
ASIC submitted that although the evidence probably did not rise to the level of wilful blindness to One Tech’s unlawful conduct on Eustace’s part, it should produce scepticism towards any submission he was blissfully ignorant of that conduct. No such submission was made on Eustace’s behalf, but it was submitted that ASIC misunderstood the “lack of remorse” element on the basis that although admitting a contravention is a mitigating factor, defending a proceeding is not an aggravating one. That submission, however, misunderstands the thrust of ASIC’s submission, which was to the effect that Eustace lacked insight into his wrongdoing – a submission which can be readily accepted.