Australia Federal Justice John Middleton has issued a decision handing a fine of AUD $20 million to Retail FX broker Forex Capital Trading Pty Ltd, which operated the ASIC licensed Forex CT brand. The company’s CEO and sole director Shlomo Yoshai was fined $400,000.

Forex CT lost its ASIC license last June. The company was originally sanctioned by ASIC back in March 2019, when ASIC put a restraining order on Forex CT, barring it from transferring money outside the country. That restraining order was amended to allow it to transfer money to clients overseas, but only on a case-by-case basis with each instance requiring approval by ASIC. In cancelling Forex CT’s license ASIC cited a number of reasons including ForexCT disregarding key obligations, unconscionable conduct, misleading and deceptive conduct, a failure to manage conflicts of interest, lacking sound ethical values in dealing with clients, and a failure to ensure its representatives were adequately trained.

The company’s CEO and sole director Shlomo Yoshai was later banned for 10 years, and a three year ban was imposed on a Forex CT account manager, Steven Marsh.

Justice Middleton said that the court will release his reasons for his penalty judgment at a later date. But the fine – while substantial – was smaller than a fine handed out by the court in a somewhat similar situation, to AGM Markets, OTM Markets and Ozifin. The AGM group was fined $75 million by the Australian Federal Court in October 2020.

As far as the fine to Forex CT, the Sydney Morning Herald has reported that the court heard that every time a Forex CT customer was pressured into making a new deposit, the senior managers in the company’s top floor offices would ring a bell to celebrate the bonus earned by the account manager. These bonuses were so big they could sometimes exceed the base salary of the sales staff.

ASIC told the court that it estimates that Forex CT customers lost more than $140 million over several years, most of which found its way to ownership coffers.

The regulator further alleged that Forex CT’s pay system included inherent conflicts that drove its account managers to put their own interests (and the interests of Forex CT) over their customers. Examples included deliberately pushing clients into margin call positions, and then warning customers if they did not deposit more cash to clear out their position their account would be closed. Account managers made more money if they got clients to deposit more money.

ASIC’s lawyer Chris Horan, QC was quoted as saying:

“The remuneration and bonus structure incentivised account managers to encourage their clients to deposit money and to discourage them from making withdrawals, irrespective of whether or not that was in the interests of the particular client.”

“Essentially the system involved something that was designed or intended by Forex CT to achieve an outcome that maximised its own gain and ultimately profit at the expense of the interests of clients to whom it was providing personal advice, and was unfair to those clients in it sought to take advantage of them.”

We believe that Forex CT is continuing to operate an offshore Retail FX and CFDs operation, still using the ForexCT brand.