ASIC Forex Broker XForex (Online Capital Markets) Hit with $30,000 Fine for Deceptive Marketing

O.C.M. Online Capital Markets Pty Ltd (OCM) has paid $30,600 in penalties after ASIC issued three infringement notices for false or misleading online advertising. Each infringement notice imposed a penalty of $10,200.

The advertisements and e-mails promoted OCM's margin foreign exchange trading platform. Foreign exchange derivatives and contracts for difference are among the products available for trading.

OCM made a number of claims in its advertisements and emails about the advantages of using its financial service including "$2533 in Just 7 Days!" and "Learn how you can increase your monthly income".

ASIC believed that the advertisements and emails were misleading because:

• They gave the impression that OCM's service could be relied upon to provide substantial profits quickly and to consistently increase one's monthly income;
• They did not adequately convey that trading in margin foreign exchange derivatives and contracts for difference is high risk, provides volatile returns and does not guarantee consistent profits; and;
• While they referred to risks and contained disclaimers, these messages were in fine print and were ineffective to correct the dominant message created by the headline claims.

ASIC Commissioner Greg Tanzer said ''Margin foreign exchange and derivative trading is high risk and gives volatile returns. Consumers should not be misled by false claims about the level or consistency of returns achievable from such trading.'

The payment of an infringement notice is not an admission of a contravention of the ASIC Act consumer protection provisions. ASIC can issue an infringement notice where it has reasonable grounds to believe a person has contravened certain consumer protection laws.

Background

OCM is an Australian financial services licensee which provides an online margin foreign exchange trading platform and products. The advertisements were published online and by email between September 2014 and March 2015.

This work continues ASIC's focus on licensee compliance in the retail OTC derivative sector, including margin FX, CFDs and binary options.