ASIC has banned a Gold Coast director of a business that leased an automated trading robot, designed to work on foreign exchange (FX) trading platforms from providing any financial services for four years.
ASIC banned Gregory William Finerty, the sole director of Bradford AI, after finding he carried on a financial services business without an Australian financial services (AFS) licence and engaged in misleading and deceptive conduct. He is banned from controlling, whether alone or with others, an entity that carries on a financial services business and performing any function involved in carrying on a financial services business.
Bradford AI leased an algorithmic trading program known as ‘Robot 1’ to trade on the FX market, using an Australia-based over the counter contracts for difference (CFD) broker.
ASIC found between about January 2020 to at least the end of December 2021, Mr Finerty dealt in financial products without a licence by arranging for his clients to acquire and dispose of financial products, being foreign currency CFDs.
ASIC also found Mr Finerty engaged in misleading or deceptive conduct when he mislead clients about the performance of Robot 1 and directed or assisted clients to mislead the CFD broker about their trading experience.
In banning Mr Finerty, ASIC also found that he is not a fit and proper person to provide financial services, is not adequately trained or competent to provide financial services, and is likely to contravene financial services law.
Mr Finerty has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC’s decision.
Mr Finerty’s banning is recorded on ASIC’s banned and disqualified register.
CFDs are leveraged derivative contracts that allow a client to speculate in the change in value of an underlying asset, such as foreign exchange rates, stock market indices, single equities, commodities or crypto-assets. They are high-risk, complex products and most retail clients lose money when trading them.
On 29 March 2021, an ASIC product intervention order imposing conditions on the issue and distribution of CFDs to retail clients came into effect. The product intervention order was extended in April 2022 and remains in place until 23 May 2027 (22-082MR).
The product intervention order:
restricts CFD leverage offered to retail clients to a maximum ratio of:
30:1 for CFDs referencing an exchange rate for a major currency pair
20:1 for CFDs referencing an exchange rate for a minor currency pair, gold or a major stock market index
10:1 for CFDs referencing a commodity (other than gold) or a minor stock market index
2:1 for CFDs referencing crypto-assets
5:1 for CFDs referencing shares or other assets
standardises CFD issuers’ margin close-out arrangements that act as a circuit breaker to close-out one or more a retail client’s CFD positions before all or most of the client’s investment is lost
protects against negative account balances by limiting a retail client’s CFD losses to the funds in their CFD trading account, and
prohibits giving or offering certain inducements to retail clients (for example, offering trading credits and rebates or ‘free’ gifts like iPads).