ASIC has banned John Carlton Martin, a director and former responsible manager of Union Standard International Group Pty Ltd (Union Standard) (in liquidation), from providing financial services for 10 years. ASIC has also disqualified Mr Martin from managing corporations for five years.
ASIC found Mr Martin's lack of understanding or regard for compliance was so serious it justified the making of significant banning and disqualification orders.
Banned from providing financial services
Union Standard was a retail over-the-counter (OTC) derivatives issuer offering clients opportunities to trade in contracts-for-difference (CFDs). Union Standard and its former corporate authorised representatives, Maxi EFX Global AU Pty Ltd (also known as EuropeFX) and BrightAU Capital Pty Ltd (also known as TradeFred) (in liquidation) operated under Union Standard's Australian financial services (AFS) licence.
ASIC found that Mr Martin was involved in Union Standard's failures to:
- do all things necessary to ensure that the financial services covered by its licence were provided efficiently, honestly and fairly; and
- take reasonable steps to ensure that its representatives, TradeFred and EuropeFX, complied with financial services laws.
ASIC also found Mr Martin failed to implement and enforce compliance policies and procedures. Mr Martin failed to address misconduct by EuropeFX and TradeFred representatives when alerted to instances including:
- representatives providing personal advice to clients when not licensed to do so; and
- representatives making representations to clients that were likely to mislead, including about the level of risk clients' funds were exposed to and expected profits.
ASIC found the financial products issued by Union Standard were high risk financial products, with features that may not be understood or appreciated by retail clients. With complex products, there is a significant need to ensure compliance, especially when corporate authorised representatives are located overseas.
In making the banning order, ASIC also found Mr Martin is not adequately trained or competent and is not a fit and proper person to provide financial services.
Disqualified from managing corporations
Mr Martin's disqualification follows the appointment of liquidators to three companies of which Mr Martin was a director:
- Union Standard;
- TradeFred; and
- Direct FX Trading Pty Ltd.
In addition to the findings of Mr Martin's banning, ASIC also found Mr Martin failed to take reasonable steps to ensure that Union Standard and TradeFred complied with the Corporations Act requirement to keep written financial records. These records explain transactions, financial position and performance and help enable true and fair financial statements to be prepared and audited.
Mr Martin has a right to apply to the Administrative Appeals Tribunal for review of ASIC's decision.
Background
Mr Martin was the responsible manager of Union Standard from 18 December 2014 to 14 September 2019 and was a director from 1 February 2019. Since 20 September 2018, Mr Martin was also the sole director of TradeFred.
On 8 July 2020, Union Standard entered into voluntary administration and liquidators were appointed on 3 September 2020. On 10 March 2020, TradeFred went into liquidation.
In July 2020, ASIC suspended the AFS licence of Union Standard and in September 2020, ASIC cancelled its AFS licence (20-216MR).
On 10 December 2020, ASIC commenced civil penalty proceedings against Union Standard and its former corporate authorised representatives, EuropeFX and TradeFred (20-319MR).
