Login
ASIC succeeds in largest-ever penalty for single enforcement action
Norton Rose Fulbright has advised the Australian Securities and Investments Commission (ASIC) on its largest penalty ever issued in a single enforcement action.
Tony Zhang
Firm: Norton Rose Fulbright (ASIC).
Value: $75 million.
Area: Regulatory disputes.
Key players: Norton Rose Fulbright regulatory disputes partner Andrew Riordan led a team with support from senior associate Sophie Wade and associate Kelvin Ng.
Deal significance: On 16 October 2020, the Federal Court of Australia ordered that AGM Markets Pty Ltd, OT Markets Pty Ltd and Ozifin Tech Pty Ltd pay a penalty amounting to $75 million in total. This is the largest penalty for a single enforcement action in ASIC’s history.
The penalty comprises $35 million for AGM Markets Pty Ltd and $20 million for each of OT Markets Pty Ltd and Ozifin Tech Pty Ltd. The defendants must also pay refunds to approximately 10,000 former clients.
Justice David Beach handed down the penalty following his February 2020 decision that AGM, OTM and Ozifin had engaged in systemic unconscionable conduct while providing over-the-counter (OTC) derivative products to retail investors in Australia.
When imposing the pecuniary penalties, Justice Beach noted, that derivatives are complex instruments and risky investments and that as a result of the contravening conduct, clients of each of the three defendants lost significant amounts of money, with total trading losses equating to approximately $32 million. His honour found that such trading losses translated to revenue earned by the defendants.
“With this Federal Court decision, ASIC’s proceeding sends a strong message deterring misconduct in the financial services industry while continuing to protect investors,” Mr Riordan said.
The penalty follows a Federal Court decision in February 2020 in which Norton Rose Fulbright advised ASIC on successfully obtaining findings of liability for (among other things) misleading and deceptive and systemic unconscionable conduct while providing OTC derivative products to retail investors in Australia.
