ASIC bans Gregory William Finerty for unlicensed FX algo trading bot
Bradford AI leased an algorithmic trading program known as ‘Robot 1’ to trade on the FX market, using an Australia-based over the counter contracts for difference (CFD) broker.
The Australian Securities and Investments Commission has banned Gregory William Finerty, the sole director of Queensland-based Bradford AI, from providing any financial services for four years.
Bradford AI leased an automated trading robot, designed to work on foreign exchange (FX) trading platforms, but was later found that it carried on its financial services business without an Australian financial services (AFS) license and engaged in misleading and deceptive conduct.
For that reason, ASIC banned Gregory William Finerty from controlling, whether alone or with others, any entity that carries on a financial services business and performing any function involved in carrying on a financial services business.
Bradford AI misled clients about FX trading bot’s performance
Bradford AI leased an algorithmic trading program known as ‘Robot 1’ to trade on the FX market, using an Australia-based over the counter contracts for difference (CFD) broker.
ASIC found between about January 2020 to at least the end of December 2021, Mr Finerty dealt in financial products without a licence by arranging for his clients to acquire and dispose of financial products, being foreign currency CFDs.
The regulator also found Mr Finerty engaged in misleading or deceptive conduct when he mislead clients about the performance of Robot 1 and directed or assisted clients to mislead the CFD broker about their trading experience.
In banning Mr Finerty, ASIC also found that he is not a fit and proper person to provide financial services, is not adequately trained or competent to provide financial services, and is likely to contravene financial services law.
ASIC banned Mark Jennings for unlicensed CFD trading with “guaranteed returns”
In late November 2022, ASIC banned Queensland-based CFD trader Mark Jennings, the director of Suncoast Trading Pty Ltd, from providing financial services and carrying on a financial services business for 10 years.
Suncoast Trading, which is now in liquidation after suffering significant losses trading client monies, advertised guaranteed investment returns and traded Contracts for Difference (CFDs) using client funds when it was not licensed, according to ASIC.
The CFD trader advertised under the name Equity Trade that he could make ‘50%, 100% or 200% per year GUARANTEED RETURNS*’, while also stating that ‘[o]ur investments are recession proof, we profit in both rising and falling markets’.
Suncoast Trading, Equity Trade, and Mr. Jennings did not hold the necessary Australian Financial Services license or authorization to provide financial services.
Even if this CFD trader held an AFS license, he wouldn’t be allowed to make such statements, especially to retail consumers. Last year, ASIC implemented restrictions on the leverage and marketing of CFD products for retail clients.
The regulator imposed restrictions on CFDs issued to retail clients, including:
- leverage ratio limits ranging from 30:1 to 2:1
- standardization of margin-close out rules
- negative balance protection
- prohibitions on offering or giving of certain inducements
ASIC also beefed up enforcement action to address misconduct, surveillance projects and public warnings, and promoted retail client education campaigns and guidance for CFD issuers.
One year later, the Australian regulator decided to renew the order for five more years after noting that during the order’s first six months of operation:
a 91% reduction in aggregate net losses by retail client accounts (from $372 million to $33 million aggregate net loss per quarter on average)
51% fewer loss-making retail client accounts per quarter on average
an 87% decrease in margin close-outs affecting retail client accounts per quarter on average
an 88% reduction in negative balance occurrences for retail clients per quarter on average.
