The Ontario Securities Commission (OSC) has approved settlement agreements with Ava Trade Ltd. (Ava Trade) and International Capital Markets Pty Ltd. (IC Markets) for improperly selling derivatives to Ontario investors. The firms operated unregistered online trading platforms that allowed Ontario residents to trade contracts for difference (CFDs), derivative products that track the price of underlying assets, including cryptocurrencies, forex, equities and commodities.
These settlement 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. Foreign companies that offer online trading of securities or derivatives, including CFDs for Ontario investors, must comply with the registration, prospectus and trade reporting requirements under Ontario securities law.
“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.”
Ava Trade, based in the British Virgin Islands, has agreed to pay an administrative penalty in the amount of CAD $550,000 and to disgorge CAD $3.7 million. The company has also agreed to pay a further CAD $25,000 towards the cost of the OSC’s investigation.
IC Markets, based in Australia, has agreed to make several voluntary payments as part of a no-contest settlement agreement, which reflects the company’s full cooperation with OSC staff and the timely, proactive and comprehensive measures it took to remediate its conduct. These include: USD $4 million (approximately CAD $5.3 million) to reflect the profit the firm received from the illegal trades, CAD $650,000 to advance the Commission’s mandate of protecting investors, and CAD $25,000 to cover the cost of the OSC’s investigation. IC Markets has also agreed to return USD $73,000 (approximately CAD $97,000) directly to Ontario clients that is currently held in dormant accounts.
Additionally, both companies implemented significant internal controls and procedures to prevent Ontario residents from opening accounts.
The OSC thanks the Australian Securities and Investments Commission and the British Virgin Islands Financial Services Commission for their assistance.
The mandate of the OSC is to provide protection to investors from unfair, improper or fraudulent practices, to foster fair and efficient capital markets and confidence in the capital markets, and to contribute to the stability of the financial system and the reduction of systemic risk. Investors are urged to check the registration of any persons or company offering an investment opportunity and to review the OSC investor materials available at http://www.osc.gov.on.ca.
Source: Ontario Securities Commission