Australian Securities and Investments Commission v Union Standard International Group Pty Ltd (No 4) [2024] FCA 1481

Australian Securities and Investments Commission v Union Standard International Group Pty Ltd (No 4) [2024] FCA 1481 File number(s):

Judgment of: WIGNEY J

Date of judgment: 20 December 2024

CORPORATIONS – where defendants USG, EuropeFX and TradeFred offered risky financial products known as contracts for difference (CFDs) and margin foreign exchange contracts (Margin FX contracts) – where USG was licensed to provide general financial product advice under its Australian Financial Service License (AFSL) – where USG authorised EuropeFX and TradeFred to provide financial services on its behalf, including general financial product advice – consideration of Corporations Act s 911A – where ASIC alleged defendants breached their authorisations by providing personal financial product advice on over 2000 separate occasions – where USG and TradeFred filed submitting notices but allegations were contested by EuropeFX – where the voluminous evidence, written submissions and schedules would have required a judgment of War and Peace dimensions – where ASIC ultimately agreed to narrowed case and pressed for fewer findings in respect of contraventions – various personal advice contraventions established Catchwords: CORPORATIONS – where ASIC alleged EuropeFX made over 1,400 representations that were false, misleading or deceptive in breach of ASIC Act ss 12DA and 12DB – where alleged contraventions again set out in lengthy schedules – where ASIC agreed to narrow case and press for fewer findings – consideration of representations in respect of future matters – ASIC Act s 12BB(2) – whether reasonable grounds for statements – where some of the alleged misrepresentations were incoherent – where no reasonable grounds for some statements – various contraventions established – some contraventions not established CORPORATIONS – unconscionable conduct – where ASIC alleged that EuropeFX engaged in a system of conduct or pattern of behaviour that was unconscionable – ASIC Act s 12CB(4)(b) – where EuropeFX submitted that a finding of systemic unconscionability could not be made because ASIC's case relied primarily on the evidence of only 30 customers referred to as the EFX30 – where EuropeFX argued the EFX30 were an unrepresentative sample – Unique International College Pty Ltd v Australian Competition and Consumer Commission [2018] FCAFC 155 considered – where ASIC's pleadings also relied on extensive documentary evidence – where pleadings not limited to the EFX30 – Unique distinguished – where evidence that EuropeFX had a system that targeted or was indiscriminate about onboarding people who were vulnerable because of their limited knowledge and experience in relation to the financial products offered – evidence that EuropeFX account managers routinely exercised undue influence and pressure on their customers – evidence that EuropeFX account managers regularly employed unfair trading strategies, gave personal advice where they were not authorised to do so and regularly made false, misleading and deceptive statements – evidence that EuropeFX profited from customers' losses – evidence that account managers were effectively incentivised to engage in misconduct as account managers were remunerated based on amount of money deposited by customers – conduct far outside acceptable norms in respect of provision of financial services – systemic unconscionability case established CORPORATIONS – unconscionable conduct – where ASIC also pressed for individual unconscionability findings in respect of eight EuropeFX customers known as the EFX8 – where EFX8 each gave evidence and were cross-examined at length – indicia of unconscionability – where the EFX8 were routinely given personal advice by their account managers when not authorised to do so – where EuropeFX representatives failed to provide any adequate explanations or disclosures about the risks involved in trading in CFDs and Margin FX contracts – where the EFX8 were vulnerable or at a disadvantage because they had low financial literacy – where EuropeFX representatives made misrepresentations to the EFX8 – where EuropeFX placed pressure on the EFX8 and induced the EFX8 to make large deposits into their trading accounts – where account managers fostered the EFX8's reliance on them by telling the EFX8 they would sustain losses or miss opportunities if they did not follow the account manager's suggestions or directions – where the complaints resolution process was unfair – contraventions established for each individual customer