Australia Court Fines AGM Markets, Others Over $53 Million

The Federal Court of Australia has ordered three companies to pay a fine of AUD 75 million ($53.19 million). The companies are global trading platform AGM Markets (AGM), OT Markets Pty Ltd (OTM), and Ozifin Tech Ltd (Ozifin).

AGM Markets will pay the highest amount of AUM 35 million ($24.8 million). Both OTM and Ozifin will pay a total of AUD 20 million (14.19) million) each.

In addition to paying the fine, the companies will also initiate a refund process for all the affected traders. According to the Federal Court, the ruling will serve as a warning message to other brokers with shady practices.

“The serious nature of the contraventions and the need to send a clear message to the limited number of licensees who are dealing OTC derivatives justifies high penalties, “said the ruling Judge.

The fine results from a two-year-long court battle between the Australian Securities and Investments Commission (ASIC) and the brokers. The ASIC started investigating them following an increased number of complaints from their clients, especially retail investors.

AGM Markets Accused Of “Systemic Unethical Conduct

According to the ASIC, the OTC derivatives market is one of its most significant focus areas due to repeated misconduct.

Moreover, Daniel Grennan QC, deputy chair of the ASIC, said that the three companies engaged in systemic unethical conduct. They also targeted vulnerable and unsuspecting investors with high levels of sophisticated fraud.

The Federal Court ruled in favor of the ASIC In February 2019 after the latter moved against them in 2018. The ASIC had indicted AGM markets and the other two companies for fraudulent activity in over-the-counter (OTC) derivative products.

AGM’s Hefty Fine to Serve as a Lesson to AFSL Holders

In 2018, the ASIC went as far as canceling AGM Markets’ license. In the current ruling, the Judge stated that as an AFSL holder, the hefty fine on AGM Markets is warranted.

The AGM Markets news will act as a warning to other AFSL holders to uphold the law in the OTC derivatives market.

In fact, the illegal activities of the three companies directly affected up to 10,000 trading clients. All the clients are now entitled to a refund with court-appointed liquidators to oversee the process.

“The penalties handed down demonstrate the serious consequences for firms who engage in this sort of misconduct,” said Grennan.