OTC derivatives provider gave unlicensed personal advice to clients

Over-the-counter derivatives provider Sirius Financial Markets, trading as Trade360, has surrendered its AFS licence following an ASIC investigation.

The corporate regulator has also banned two former executives, Jonathan Schneider and Oskar Pecyna, from controlling an entity that carries on a financial services business or performing any executive or management role in relation to a financial services business for eight years.

According to ASIC, Sirius Financial engaged offshore call centre, Toyga Media, to source clients to trade in high-risk contracts-for-difference (CFDs) and margin foreign exchange contracts products. It was found that the call centre representatives used “pressure selling tactics” and provided clients with personal advice without the licence to do so.

Sirius’ conduct was also found to be “unconscionable” and “likely to mislead or deceive” customers.

“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.

Mr Schneider and Mr Pecyna were found to have been involved in the breaches and were “not adequately trained or competent” to be in control of the business.

ASIC said in a statement: “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.”

Sirius Financial will cease operations on 29 July 2022.

The news comes after ASIC extended its product intervention order imposing conditions on the issue and distribution of CFDs for five more years in April.

The order originally came into effect on 29 March 2021 and has strengthened protections through the reduction of CFD leverage available to retail clients and by targeting product features and sales practices that amplify the CFD losses of retail clients, according to the corporate regulator.

In the first six months of the order’s operation, ASIC said that there was a 91 per cent reduction in aggregate net losses for retail client accounts, falling from an average of $372 million per quarter to $33 million.

Furthermore, ASIC observed an 88 per cent reduction in negative balance occurrences and an average decrease of 87 per cent in margin close-outs for retail clients per quarter.

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.