The Australian Securities and Investments Commission (ASIC) launched a civil lawsuit against Forex CT and its sole director Shlomo Yoshai last year. ASIC claimed that the company had acted in bad faith against its customers. Earlier this year Mr Yoshai was banned by ASIC from working in financial services for 10 years but he appealed that decision.
In early May the Federal Court learned that the pay and bonus model used by Forex CT to reward its employees had catastrophic consequences for its clients who were harassed to deposit more and more into their accounts by bonus-seeking employees.
A USD 20 million fine was imposed on the company for its systemic and ongoing violations. Mr Yoshai was fined USD400,000. The fine is a small part of the total USD70 million fine the group could have received for its conduct. The fine was reduced to USD20 million after ASIC’s lawyers said Forex CT and Mr Yoshia had cooperated with the regulator in its investigation.
ASIC said the Forex CT’s remuneration system involved inherent conflicts that caused its account managers to put their own interests and the interests of Forex CT over their customers. This includes deliberately pushing clients into margin call positions and then warning clients that if they do not deposit more money, their account would be closed.