Australia’s financial regulator ASIC has reported that it has forced retail forex brokerage and wealth management firm Formax Group to remove what it called ‘false statements’ from its website, regarding the suspension by ASIC of the Australia financial services license (AFSL) of recently-acquired Formax subsidiary Australian Capital Markets Advisory Services Pty Ltd (or ‘ACMAS’).
Formax is controlled by Chinese investors, is based in the Cayman Islands, and has forex brokerage subsidiaries in New Zealand and the UK, where Formax recently received an FCA license. At one point Formax was negotiating to buy FXCM Hong Kong, although that company was eventually sold by FXCM to Rakuten Securities.
As we earlier reported, under previous ownership and management the once-regulated ACMAS ceased all activity earlier this year leading to the suspension of its license by ASIC. Formax stepped in and acquired ACMAS, with hopes to revive and make use of its ASIC license and ‘become regulated’ in Australia.
So what got Formax into hot water with ASIC?
Well it appears that in a press release Formax tried to downplay the suspension of ACMAS’s license, stating that ACMAS had its Australian financial services licence (AFSL) suspended ‘as part of a normal practice that occurs whenever an enterprise restructures‘. The Formax press release also claimed that ACMAS’s suspension will be lifted once the restructure had been finalized.
And that simply wasn’t true. The suspension by ASIC of an AFSL is not a normal practice that occurs when an entity restructures. Following concerns raised by ASIC, Formax removed the false statements from its website.
ASIC Commissioner Cathie Armour commented on the situation:
ASIC undertakes all action for good reason. It is important that industry and investors understand those reasons. In this case we were concerned to discover an overseas parent commenting in a way that misrepresented the action ASIC had taken and was likely to mislead investors.
In the meantime, ACMAS’s license suspension – which was initially to be in effect until October 30 – has been extended through to November 27.
Formax is still hoping to have ACMAS’s ASIC license reinstated by the end of the year, assuming that the company can demonstrate its ability and readiness to recommence business, including taking steps to put in place all trading infrastructure, compliance, staffing, IT and human resources.
We will continue to follow this story as it develops. Stay tuned to LeapRate…
To see the official ASIC statement on the situation click here.