Unregistered platforms found to have illegally sold to Ontarian investors
The Ontario Securities Commission has entered settlement agreements, with a combined worth over $10 million, with Ava Trade Ltd and International Capital Markets Pty Ltd (IC Markets), for improperly selling derivatives to Ontario investors.
According to a statement by the OSC, the firms operated unregistered online trading platforms that allowed Ontario residents to trade contracts for difference (CFDs), or derivative products that track the price of underlying assets, including cryptocurrencies, forex, equities and commodities.
The OSC said that the agreements follow allegations that the two companies violated Ontario securities law by engaging in unregistered trading of CFDs, and by issuing and distributing these products to Ontario investors without a prospectus. Under Ontario securities law, foreign companies that offer online trading of securities or derivatives, including CFDs for Ontario investors, must comply with the province’s registration, prospectus and trade reporting requirements.
"If you are a foreign market participant conducting business on a global scale, you are responsible for reviewing, understanding and complying with local securities laws," said Jeff Kehoe, OSC director of enforcement. "This includes identifying and properly managing the compliance risks associated with operating in multiple jurisdictions."
Aside from the monetary settlements, both companies agreed with the OSC to implement internal controls and procedures to prevent Ontario residents from opening accounts.
British Virgin Islands-based Ava Trade has agreed to pay an administrative penalty worth $550,000 and to disgorge $3.7 million. The company has also agreed to pay a further $25,000 for the cost of the OSC's investigation.
Meanwhile, Australia-based IC Markets has agreed to make several voluntary payments as part of a no-contest settlement agreement, which, according to the OSC, reflects the company's full cooperation with the commission and the timely, proactive and comprehensive measures it took to remediate its conduct. The payments include: $5.3 million to reflect the profit the firm received from the illegal trades, $650,000 to advance the commission's mandate of protecting investors, and $25,000 to cover the cost of the investigation. IC Markets has also agreed to return around $97,000, which is currently held in dormant accounts, directly to Ontario clients.