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Court finds FX business pushed SMSF set-ups
The Federal Court in Victoria has found a foreign exchange (FX) business recommended to members that they establish an SMSF to purchase its memberships, and use money from their SMSF to trade in foreign exchange contracts.
According to an announcement from ASIC released this afternoon, Monarch FX Group and its former director and general manager, Quinten Hunter, have been restrained from carrying on, either directly or indirectly, a financial services business for four years following action by ASIC.
Monarch FX and Mr Hunter have been removed from the financial services industry after the Federal Court in Victoria made a declaration that Monarch FX carried on a financial services business without holding an Australian Financial Services Licence (AFSL) or being authorised by an AFSL holder to provide certain financial services, ASIC stated.
In turn, the court found Monarch FX was not licensed or authorised to make recommendations in relation to superannuation products.
The court accepted that Monarch FX recommended to members that they establish an SMSF to purchase its memberships, and then use money from their SMSF to trade in foreign exchange contracts, ASIC stated.
ASIC's investigation found that many clients of Monarch FX set up their own SMSF and from the superannuation funds, deposited funds into trading accounts with FX brokers, Vantage FX Pty Ltd and AxiCorp Financial Services Pty Ltd.
The deposits ranged from $5,000 to $40,000, but were typically $10,000. The court was told that losses to the SMSF clients averaged out at 40 to 50 per cent, ASIC stated.
“Given the complexity of foreign exchange trading, consumers should understand the risks before investing, and particularly, before establishing a self-managed superannuation fund in order to trade in foreign exchange”, said ASIC commissioner Greg Tanzer.
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