12-258MR ASIC bans Apple Investment Company Pty Ltd for five years
Monday 29 October 2012
ASIC has banned Apple Investment Company Pty Ltd, of Queensland, from providing financial services for five years, effective from 24 October 2012, after it was found this company failed to comply with financial services laws.
Apple Investment Company Pty Ltd, ACN 132 675 891 (Apple) was an authorised representative of Mark Power Financial Pty Ltd from 6 October 2009 until 4 April 2011.
Apple offered clients a foreign exchange trading platform called ‘FX Calibre’ and foreign exchange education packages. Apple marketed its products and services through telemarketing, a website and a brochure, and promised commissions to clients who referred friends and family through its ‘Apple Tree’ program.
ASIC found that Apple made false or misleading statements to clients, including claims that:
FX Calibre had the potential to generate six per cent returns a month based on historical performance, when in fact the only basis for these claims was simulated returns on a demonstration account, that was not FX Calibre
clients could invest in Apple’s Managed Discretionary Account (MDA), when in fact Apple did not offer a MDA, and was not authorised to do so
Apple’s Managed Fund had earned profit of 41.72 per cent from January to March 2010, when in fact Apple did not manage a managed fund and was not authorised to do so
‘FXC Education packages’ 1, 2 and 3 included the services of a staff member who would ‘take the client under their wing for 12 months to ensure a great start to (their) trading’. Package 1 offered a ’senior trader’, package 2 a ‘senior licensed trader’ and package 3 (the most expensive), a ‘head trader’. In fact, these three staff titles referred to the same staff members, none of whom actually traded on behalf of Apple
‘FXC Education package 3’offered ‘an email sent every morning with our head trader’s daily report on what he will be trading for the company that day’, when in fact no-one traded on behalf of Apple
a ‘24 month money back guarantee’ would be provided and that this guarantee was unconditional and that clients could claim money back at any time within 24 months, when in fact the guarantee had a condition that a client had to trade for 24 months before they could claim their money back.
ASIC also found that Apple breached referral selling provisions when it offered its ‘Apple Tree’, where clients could receive commissions from the trading of family or friends they had referred to Apple. It was found that despite ASIC advice to Apple that the Apple Tree program was non-compliant, Apple failed to take all steps to cease promoting Apple Tree.
Further, Apple failed to give a product disclosure statement to all clients.
ASIC Commissioner, Peter Kell said Apple Investment Company showed blatant disregard for financial services laws and specifically, the requirement to provide accurate information to consumers.
‘ASIC wants investors to participate in the financial system with confidence. The provision of misleading information to clients by Apple erodes this confidence so it is important that Apple be removed from the financial services industry for the next five years.’
Apple has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC’s decision.
On 14 November 2011 ASIC cancelled the Australian financial services (AFS) licence of Mark Power Financial Pty Ltd (refer 11-257AD).