Trade360, which signed up Australian cricketer Steve Smith as a brand ambassador, has given up its financial licence and two former executives have copped eight-year bans after an investigation found it sold risky assets to clients with little investing know-how.
Sirius Financial, which operates the Trade360 brand, is alleged to have hired offshore call centre Toyga Media to find clients to trade in contracts-for-difference (CFDs) and margin foreign exchange contracts for Sirius Financial, an investigation by the Australian Securities and Investment Commission found.
Steve Smith was a brand ambassador for Trade360.
CFDs are high-risk and complex financial products that allow customers to leverage and increase their bets. They can result in significant upside, but investors can also lose more than they initially put in. Until March 2021, they could get a leverage ratio of 30:1. Following intervention from the corporate regulator, that was reduced to 2:1, and subsequently ASIC extended this for another five years to May 2027.
“ASIC’s investigation uncovered concerning consumer losses from trading in CFDs, including a Sirius Financial investor, who had limited knowledge of the market, losing over $400,000 after being told CFDs were a safe investment,” ASIC commissioner Danielle Press said.
ASIC also banned former Sirius Financial executives Jonathan Schneider and Oskar Pecyna from controlling an entity that is involved in financial services, or from performing any executive or management role in financial services, for eight years.
Sirius Financial also surrendered its Australian Financial Services licence.
“ASIC’s investigation found the call centre representatives persuaded Sirius Financial clients to trade using pressure selling tactics and provided clients with personal advice when Sirius Financial was not licenced to do so. Sirius Financial was also found to have engaged in unconscionable conduct and conduct that was likely to mislead or deceive,” ASIC said.
ASIC said its investigation also found that in failing to take proper steps to deal with Toyga’s conduct, it breached its licence conditions to do all things necessary to ensure financial services covered by its licence were provided efficiently, honestly, and fairly.
It also alleged that it did not take reasonable steps to ensure its representatives complied with financial services law, and did not have adequate arrangements to manage conflicts of interest.
ASIC alleged that Mr Pecyna and Mr Schneider were both involved in breaches of Sirius Financial’s licence obligations and “were not adequately trained or competent to be involved in the control of a financial services business”.
“In reaching these findings, ASIC found that both men failed to adequately perform their duties as responsible managers and lacked the necessary professionalism, integrity, judgement and diligence to play a role in the management or control of a financial services provider,” it said.
Trade360 signed Mr Smith on as a brand ambassador in May 2020. There is no suggestion Mr Smith was involved in or had any knowledge of any of the allegations made against Sirius Financial.
Sirius Financial will wind down retail and wholesale operations and cease providing financial services on July 29.
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