The Australian Securities and Investments Commission (ASIC) has banned former Equity Trade director Mark Jennings from providing financial services and controlling any financial services business entity for 10 years.

Jennings was found to have falsely advertised guaranteed returns for trading contracts for Difference (CFDs) and providing services without any licence.

Jennings is a former director of Suncoast Trading Pty Ltd(operated as Equity Trade), a company in liquidation. The firm collapsed after suffering heavy losses while trading with client funds.

ASIC Australia detailed that Jennings offered clients high guaranteed returns when he advertised Equity Trade. He claims he can "guarantee returns of 50%, 100% or 200% per year". In addition, the Equity Trade website claims that the firm's investments are "recession-proof" because it profits from "rising and falling markets." All of these services are provided without any permission.

ASIC detailed that Jennings did not hold any Australian Financial Services (AFS) license at the time of conducting the investment business, which is mandatory for such business. In addition, he also made some customers deposit funds into their personal trading accounts and traded CFDS without consulting customers, which showed traces of misappropriation of funds.

In addition, he was accused of making false and misleading return guarantee statements. In fact, CFD trading allows traders to profit from both rising and falling markets. However, these instruments are extremely risky and most retail traders lose their investment when trading CFDS. Regulators in the UK and Europe even require retail brokers to disclose the proportion of clients who lose money.

Jennings even provided false or misleading information to regulators about the number of Equity Trade customers and the extent of the losses. The regulator also found that he did not have adequate training or competence to provide financial services and was "likely to violate financial services laws."

Earlier this month, ASIC also banned a former manager of CFDS broker Trade360 for eight years, accusing him of failing to "receive adequate training and competence". ASIC, meanwhile, obtained a court order against another trader earlier this year, sentencing him to nine months in jail for using inside information to trade CFDS.

Source: FX110