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Screenshot of a breaking news alert e-mail from Q2 2017
Australia financial regulator ASIC announced that it has won an Administrative Appeals Tribunal hearing against Retail Forex broker IMS FX Services Pty Ltd, allowing ASIC to make public its cancellation of IMF FX’s regulatory license. The cancellation actually happened back in February, but was kept quiet under a confidentiality appeal by IMS FX.
The Administrative Appeals Tribunal has rejected the application from IMS FX that sought confidentiality orders and an interim order that prevented ASIC from amending the public Australian financial services (AFS) licence register to record that ASIC had indeed cancelled IMS FX’s AFS licence.
The application was made pending an appeal to overturn ASIC’s decision to cancel the licence.
Some background… On March 25, 2015, IMS FX lodged an application for an AFS licence which was granted by ASIC on September 16, 2015. Subsequently, ASIC learned that the controllers of the licensee had reached an agreement (on August 7, 2015) to sell IMS FX shortly after the licence is granted.
As the licence application did not disclose this intention to change ownership, directorships, intended business activities and resources, on December 22, 2015, ASIC convened a hearing to determine whether the licence should be cancelled.
The hearing took place on February 3, 2016 and an ASIC delegate found that the application lodged with ASIC was misleading in a material way and decided to cancel the licence.
The decision to cancel IMS FX’s licence was notified to the applicant on February 24, 2016. On February 26, 2016, IMS FX appealed ASIC’s decision and also sought to defer the effect of ASIC’s cancellation order and confidentiality orders. An interlocutory hearing was held on March 11, 2016 and on August 31, 2016, the Tribunal made a decision rejecting IMS FX’s interlocutory application.
The Tribunal said in its decision,
In the circumstances, I am satisfied that there is considerable risk to the public if the Decision is stayed. I consider that there is considerable merit in ASIC’s submission that the asserted misleading character of the application made by the Applicant goes to the heart of the risk to the public of allowing the Applicant to continue under its AFSL.
Furthermore, there is, as submitted by ASIC, a further aspect of the public interest which lies in the general deterrent effect of [ASIC] publicising the fact that an AFSL obtained by means of a materially misleading application has been cancelled – which supports the role of ASIC in carrying out its function of protecting the public.
In light of the Tribunal’s decision, the AFS licence register now reflects that IMS FX’s AFS licence has been cancelled.
Deputy Chairman, Mr Peter Kell said,
It is paramount that any person seeking to obtain an AFS licence submits an application that accurately reflects the facts and circumstances as well as the financial services business the applicant intends to carry on under the licence.
This should be a salient reminder to applicants that should any material circumstances surrounding the application change, the applicant has a responsibility to disclose this to ASIC to ensure that ASIC’s decision is made on a fully informed and accurate basis. A failure to do so risks ASIC taking regulatory action, including, as in this instance, ASIC deciding to cancel the licence.
More on the cancellation of IMF FX’s AFS license by ASIC can be seen here.