Federal Court fines Union Standard International Group $300 million but stays order for appeal

The Federal Court imposed a $300 million fine on Union Standard International Group on Thursday, the largest penalty ever secured in a case brought by the Australian Securities and Investments Commission. The court found that the company, also known as USGFX, and its affiliates duped investors in Australia and China into committing as much as $300 million to contracts for difference.

Between 95 and 99 per cent of customers lost their money and in many cases owed the broker additional thousands of dollars.

Justice Michael Wigney described the conduct as among the most serious the court had seen. “I find it difficult in this case to envisage a more serious case of contravening conduct,” he said. ” The scheme operated through the trading platforms TradeFred and EuropeFX.

USGFX acted as the management company while its affiliates sold the contracts for difference, which allowed customers to bet on short-term price movements in assets such as gold. EuropeFX served as the official foreign exchange trading partner of the South Sydney Rabbitohs until 2019, and USGFX was the sponsor of Sheffield United FC.

Tens of millions of dollars belonging to customers were transferred from USGFX’s accounts to a company in Vanuatu after the scheme collapsed in 2018 and have not been recovered.

The company maintained an office in Martin Place in Sydney’s financial district for several years. ASIC first filed the case in 2020. The regulator alleged that USGFX continued to sell the products to clients in China even after they were banned there.

In 2017, customers in China took staff at the company’s Shanghai office hostage until police intervened, prompting China to request Australian assistance to halt the operation. The case affected more than 10,000 people. It is one of the first instances in which ASIC has pursued an Australian company for breaches of another country’s laws.