Court rules in favor of ASIC in case against FX firms Gallop International Group and Gallop Asset Management

The Federal Court of Australia has ruled in favor of the Australian Securities & Investments Commission (ASIC) in a case against Gallop International Group Pty Ltd (In liquidation) (GIG), Gallop Asset Management Pty Ltd (GAM), Stumac Pty Ltd (Stumac) and former director Mr Ming-Chien Wang.

Let’s recall that, back in November 2017, as FinanceFeeds reported, ASIC managed to secure freezing orders against GIG, GAM and Mr Ming-Chien Wang. The orders, issued by the Federal Court, stipulated the freeze of the money of the defendants held in their bank accounts and restraining them from carrying on a financial services business in Australia without holding an Australian Financial Services licence. In addition, brokers were required to deactivate the websites www.gallopfx.com.au and www.gamfx.com, which promote trading in Forex, metals and contracts for difference.

Justice Charlesworth has proposed orders and given the parties time to apply to the Court about the proposed orders, but if no party applies, the Court will make the proposed orders on September 26, 2019, including:

• declarations of contraventions of financial services laws by GIG;
• declarations that Mr Wang was knowingly concerned in the contraventions of GIG;
• permanent injunctions restraining Mr Wang from carrying on a financial services business;
• an order disqualifying Mr Wang from managing a corporation for 10 years;
• an order that Mr Wang pay a civil penalty of $3 million; and
• the winding up of GAM and Stumac.

The proposed civil penalty against Mr Wang will be the highest civil penalty awarded against an individual in an ASIC proceeding.

Charlesworth J found GIG operated a financial services business without holding a financial services licence, published statements which were false and misleading and engaged in misleading and deceptive conduct. Charlesworth J also found that Mr Wang, being the controlling mind and architect of the scheme, was knowingly concerned in GIG’s contraventions, and that GIG was in the process of transitioning its business to Stumac.

The proposed orders include an order that Mr Martin David Lewis of KPMG be appointed liquidator of GAM and Stumac. Mr Lewis is also the liquidator of GIG.

GIG and GAM operated the Gallop business, which promoted and provided services for trading in various financial products including foreign exchange, precious metals, derivatives and contracts for difference. The business facilitated access to an online trading platform accessed through websites accessible in Australia and overseas.

Between May 2016 and May 2017 more than $36 million was deposited, primarily by investors, into GIG’s Australian bank account. Over that same period almost all of that money was withdrawn and paid into overseas bank accounts held by entities related to GIG or otherwise having connections with Mr Wang, his family or associates.

In June 2018, GIG was wound up in insolvency in a separate proceeding before the Court and Martin David Lewis, now of KPMG, was appointed liquidator.

The trial took place on September 10, 2018. Mr Lewis, as liquidator of GIG, did not oppose the orders sought by ASIC and adduced no evidence at the hearing. There was no appearance at the hearing by GAM, Stumac or Mr Wang.