Australian Securities and Investments Commission v AGM Markets Pty Ltd (in liquidation) (No 3)

• Jurisdiction: Australia Federal only
• Court: Federal Court
• Judge: BEACH J
• Judgment Date: 26 February 2020
• Neutral Citation: [2020] FCA 208
• Date: 26 February 2020

FEDERAL COURT OF AUSTRALIA

Australian Securities and Investments Commission v AGM Markets Pty Ltd (in liquidation) (No 3) [2020] FCA 208

File number:	VID 126 of 2018
Judge:	BEACH J
Date of judgment:	26 February 2020
Catchwords:	CORPORATIONS – offer of derivative products – contracts for difference – margin foreign exchange contracts – offering to retail investors in Australia – financial product advice – financial services – personal product advice – general product advice – scope and application of ss 766B (1) to (4) of the Corporations Act 2001 (Cth) – obligation to act in best interests of client – scope and application of s 961B – obligation to provide advice appropriate to the client – application of s 961G – obligation to avoid conflict of interest – application of s 961J – warning concerning general advice – application of s 949A – Australian financial services licence – scope and application of s 912A(1) – failure to supervise authorised representatives – application of s 961L – agency – application of s 961K – misleading or deceptive conduct – misrepresentations – s 1041H of Corporations Act and ss 12DA and 12DB of the Australian Securities and Investments Commission Act 2001 (Cth) – statutory unconscionable conduct – scope and application of s 12CB of the ASIC Act – individual instances of unconscionable conduct – various contraventions established
Legislation:	Australian Securities and Investments Commission Act 2001 (Cth) ss 12BB, 12CA, 12CB, 12CC, 12DA, 12DB Corporations Act 2001 (Cth) ss 760A, 761D, 761G, 763A, 764A, 766B, 766C, 910A, 911A, 911B, 912A, 915C, 916B, 916F, 923C, 941A, 946A, 949A, 961, 961B, 961D, 961E, 961G, 961J, 961K, 961L, 961Q, 1013A, 1015C, 1041H, 1311, 1317E
Cases cited:	Australian Competition and Consumer Commission v Medibank Private Ltd (2018) 267 FCR 544 Australian Securities and Investments Commission v AGM Markets Pty Ltd (2018) 129 ACSR 335; [2018] FCA 1119 Australian Securities and Investments Commission v Camelot Derivatives Pty Ltd (in liq) (2012) 88 ACSR 206 Australian Securities and Investments Commission v Kobelt (2019) 368 ALR 1 Australian Securities and Investments Commission v One Tech Media Ltd [2020] FCA 46 Australian Securities and Investments Commission v Westpac Banking Corporation (No 2) (2018) 266 FCR 147 Australian Securities and Investments Commission v Westpac Securities Administration Ltd (2019) 373 ALR 455 Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199 Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525 Thorne v Kennedy (2017) 263 CLR 85 Unique International College Pty Ltd v Australian Competition and Consumer Commission (2018) 362 ALR 66
Date of hearing:	1, 2, 7 and 11 October 2019
Date of last submissions:	24 October 2019
Registry:	Victoria
Division:	General Division
National Practice Area:	Commercial and Corporations
Sub-area:	Corporations and Corporate Insolvency
Category:	Catchwords
Number of paragraphs:	535
Counsel for the Applicant:	Mr JP Moore QC and Mr T Chalke
Solicitor for the Applicant:	Norton Rose Fulbright
Counsel for the First Defendant:	The First Defendant did not appear
Counsel for the Third Defendant:	Mr MGR Gronow QC, Ms L Collaris and Mr A Christopherson
Solicitor for the Third Defendant:	Piper Alderman
Counsel for the Fifth Defendant:	Mr JL Evans QC and Mr P Miller
Solicitor for the Fifth Defendant:	O’Loughlin Westhoff
Counsel for the Sixth Defendant:	The Sixth Defendant did not appear

ORDERS

		VID 126 of 2018
BETWEEN:	AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Applicant
AND:	AGM MARKETS PTY LTD (ACN 158 706 766) (IN LIQUIDATION) First Defendant ; OT MARKETS PTY LTD (ACN 621 714 181) (IN LIQUIDATION) Third Defendant ; OZIFIN TECH PTY LTD (ACN 618 038 396) (IN LIQUIDATION) (and another named in the Schedule) Fifth Defendant

JUDGE:	BEACH J
DATE OF ORDER:	26 FEBRUARY 2020

THE COURT ORDERS THAT:

1. Within 21 days of the date of these orders, each party file and serve proposed minutes of orders and short submissions (limited to 3 pages each) to give effect to these reasons.

2. Costs reserved.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

BEACH J:

1. The present proceeding concerns the activities of the first defendant (AGM), the third defendant (OT) and the fifth defendant (Ozifin) and the promotion of derivative instruments. From the latter part of 2017 until the middle of 2018, each of the three defendants operated separate businesses in Australia that offered over-the-counter (OTC) derivative products being contracts for difference (CFDs) including margin foreign exchange contracts (FX contracts) to retail investors in Australia. They provided retail investors an online platform on which to invest in those products and also provided financial product advice to them by telephone and email (the financial services). That advice was provided by account managers (AMs) who were engaged on behalf of the defendants, but who were based overseas. The AMs engaged on behalf of AGM were based in Israel. The AMs engaged on behalf of OT were based in Cyprus and later the Philippines. And the AMs engaged on behalf of Ozifin were based in Cyprus.

2. ASIC alleges that by the interactions between the AMs and those retail investors, each of the defendants contravened various provisions of the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act). And it has sought against each defendant, inter-alia:

1. declarations of contravention;

2. orders that the defendants:

1. pay pecuniary penalties to the Commonwealth; and

2. make payments to those retail investors being their clients who suffered losses arising from the contraventions by way of non-party redress; and

1. orders that the defendants be wound up on the just and equitable ground.

3. The trial before me proceeded on the issue of liability only....