ASIC warns on fraud after probe finds neobrokers mishandled client money
The financial regulator has released the findings of a two year review into the once booming online trading sector, as foreshadowed last week by Capital Brief.
The corporate regulator ASIC has scolded Australia’s next generation of trading apps and revealed some operators have mishandled client funds as it released the findings from a two year probe into the sector.
As foreshadowed by Capital Brief last week, ASIC raised concerns about misleading advertising of financial products by neobrokers, insuffient internal compliance in the industry, social trading behaviour and the widespread practise of renting key regulatory licences from third party operators.
But the regulator also revealed that it had discovered some of the country's neobrokers had mishandled their clients money - an activity that has been at the centre of some of history's biggest financial crises.
In some instances, ASIC said trading platforms had received and held funds in their own names or incorrectly mixed it with other funds, raising the risk of “non-permitted withdrawals [and] fraud” and potentially putting the money at risk in the case of insolvency.
