ASIC Pushes a Ten-year Ban on Forex Capital Trading Director

The Australian Securities and Investments Commission(ASIC) yesterday announced its ban of Forex Capital Trading Pty Ltd (Forex CT) director Shlomo Yoshai, and four others of the retail OTC derivative issuer’s employees. 

Specifically, Shlomo Yoshai, CEO, responsible manager and sole director at Forex CT, has been given a ten-year ban after behaviour on Forex CT’s trading floor had been compared to scenes in The Wolf of Wall Street by former account managers.

In addition, two former team leaders, Jarrod Popuard, and Benjamin Esler, are banned for six years, and four-and-a-half years, respectively, while the former account manager, Huy Minh (Andy) Hoang is banned for five years and Andrew Tran for three years.

According to the regulator, Mr Yoshai was found to have been involved in Forex CT’s breaches of the Corporations Act, which included:

· failing to do all things necessary to ensure the financial services are provided efficiently, honestly and fairly; and

· failing to have in place adequate arrangements for the management of conflicts of interest. This included Forex CT’s commission structure which entitled team leaders and account managers to a percentage of client “net deposits” (deposits less withdrawals).

In reaching these findings, ASIC found Mr Yoshai put pressure on account managers to:

· implement high pressure sales tactics when engaging with clients; 

· offer incentives to clients to encourage deposits;

· recommend trading strategies that would increase a client’s exposure to the market;

· pressure clients to deposit funds into their trading accounts; and

· pressure clients to delay or cancel withdrawal requests.

ASIC also found Mr Poupard and Mr Esler:

· contributed to fostering Forex CT’s high-pressure sales culture;

· did not comply with financial services laws. In the case of Mr Poupard, this included making misleading representations to clients of Forex CT. Mr Esler put pressure on Forex CT clients to deposit funds into their trading account and delay or cancel withdrawals in order to maximize his own remuneration that was based on ‘net deposits’, which amounted to unconscionable conduct;

​· instructed their teams to: delay or prevent clients from proceeding with withdrawal requests; use incentives, such as ‘credits’, and adopt various sales strategies to encourage clients to deposit funds into their trading accounts.

​ASIC found Mr Hoang and Mr Tran:

· were involved in unfair practices, including encouraging client deposits, by offering valueless incentives and delaying client withdrawal requests;

· made misleading representations to their clients, including that: clients would make profits trading with Forex CT when there were no reasonable grounds for making such representations, given that an investment in a CFD is a speculative high-risk investment; and they (and other Forex CT representatives) did not obtain any benefit from clients depositing funds into their trading account, in circumstances where they received a commission based on a percentage of client ‘net deposits’.

ASIC also found Mr Hoang gave personal advice to clients while not understanding the nature of the financial products (CFDs and FX Contracts) about which he gave advice.

In making the banning orders, ASIC found all five men are not fit and proper persons to provide financial services.