Union Standard International Group (USG), along with its former affiliates TradeFred and EuropeFX, was found guilty of “systemic unconscionable conduct” by an Australian federal court. Between 2018 and 2020, their actions caused customers to lose more than AUD 83 million (approximately USD 51.7 million).
Misleading Practices by CFD Brokers
USG, a contracts for differences (CFDs) broker, operated under an Australian Financial Services (AFS) license. However, TradeFred (managed by BrightAU Capital) and EuropeFX (operated by Maxi EFX Global), which served as its corporate authorized representatives, engaged in misleading and deceptive practices. These companies onboarded clients, offered USG’s products, and exploited inexperienced traders.
Evidence presented in court revealed that unlicensed advisors from EuropeFX and TradeFred pressured customers into making deposits and targeted traders who lacked understanding of CFD risks. The firms also employed a controversial practice known as B-booking, where they took opposing positions to customer trades, leading to significant losses for 95–99% of their clients.
The court noted that these companies profited directly from customer losses, incentivizing account managers to push clients into higher-risk activities. Justice Wigney condemned EuropeFX’s behavior as “offensive to conscience” and far removed from acceptable financial services practices.
Regulatory Action and License Violations
USG’s regulatory issues surfaced in mid-2020 when it entered voluntary administration, leading to the cancellation of its AFS license. Even earlier, in December 2019, the Australian Securities and Investments Commission (ASIC) froze the assets of EuropeFX and TradeFred to protect customer funds and launched an investigation.
The court also found that USG violated its licensing obligations by offering CFDs to customers in China, where such instruments are legally ambiguous. This breach of Australian regulations, which require licensees to act “efficiently, honestly, and fairly,” marked a significant violation of the AFS licensing terms.
“This judgment establishes a critical precedent for Australian financial service providers offering CFDs or similar instruments to overseas clients, particularly in jurisdictions where such activities may be restricted,” said ASIC Deputy Chair Sarah Court.
Implications for the Financial Industry
The court’s decision underscores the importance of adhering to regulatory standards, even when operating across international borders. ASIC highlighted that offering CFDs to Chinese customers, although not explicitly regulated in China, could expose brokers to both civil and criminal liability in the country.
The ruling also reaffirms the global scrutiny on Australian financial services licensees, as regulators work to safeguard the reputation of Australia’s licensing regime.
Both TradeFred and EuropeFX have since ceased operations. TradeFred entered liquidation in March 2020, while EuropeFX’s sole director was banned by ASIC for five years.
ASIC initially launched proceedings against USG, TradeFred, and EuropeFX in December 2020, emphasizing its commitment to holding firms accountable for illegal practices.
