Investors in a cold-calling scam will receive some of their money back following action taken by the regulator in the Federal Court of Australia in Melbourne.
City Index Australasia (CIA) and its director, Blair Jason Travers, were ordered to remove all material used to promote the scam and were barred from the financial services industry for 10 years.
About $38,000 of investor funds, previously frozen following ASIC action, will be distributed to investors on a pro-rata basis.
ASIC estimates approximately 62 cents in the dollar will be returned to the five investors caught up in the scam.
The watchdog had alleged CIA conducted a cold-calling scam between August 24 2011 and September 16, 2011.
The company promoted investments in financial products by cold calling investors who in turn were directed to false financial-product information on the website, cityindexmutual.com.
At no time did CIA hold an Australian financial services (AFS) licence, which is required under the Corporations Act.
CIA has no association or affiliation with City Index Australia Pty Ltd (ACN 141 774 727), which does have an AFS licence.
Falsity, dishonesty and deception
The Federal Court found that CIA made false representations to investors and engaged in dishonest, misleading and deceptive conduct.
Specifically, the court found that CIA falsely stated it was associated with City Index Australia; was a reputable provider of financial services with a history of generating investment returns for clients; was the holder of an AFS licence when it was not; and would invest client funds in financial products in order to generate a return on clients’ investments.
CIA told investors that returns would be generated through investments in contracts for difference, spread betting and foreign exchange markets.
The court orders obtained by ASIC also prevent CIA and Travers from carrying on a financial services business for 10 years.
Both are required to remove all promotional material from any CIA website and disconnect all company phone numbers used to promote the scam.
ASIC Commissioner Peter Kell said the removal of unscrupulous operators from the financial services sector was critical to creating an environment where investors could feel confident when making decisions.
“While victims of CIA will receive some compensation following the urgent court orders we obtained in September last year to freeze investor funds, the scam will also be shut down and its operator banned from the financial services industry,” he said.
“This is crucial in preventing more people from falling victim to these scams.”
ASIC became aware of the company’s activities following a complaint from City Index Australia, which had been contacted by an investor who had mistakenly deposited funds with CIA.
