ASIC Bans XTrade Directors, Cancels AFS License

The Australian Securities and Investments Commission (ASIC) has imposed significant penalties on former directors and responsible managers of XTrade.AU Pty Ltd (XTrade). Shay Zakhaim and Anthony Anderson have been barred from running a financial services firm as directors or accountable management for three and five years, respectively. This judgment comes after XTrade's Australian Financial Service (AFS) license was revoked owing to financial services legislation infractions between June 2018 and September 2022, as well as engaging in immoral behavior.

XTrade allowed customers to trade contracts for difference (CFDs) and foreign exchange contracts (FX contracts). ASIC's inquiry indicated that both Zakhaim and Anderson failed to guarantee that XTrade followed these financial regulations. They were also responsible for overseeing and supervising the company's representatives. The results revealed that XTrade lacked adequate systems to address conflicts of interest, resulting in aggressive sales practices by firm staff towards Australian customers. Furthermore, the directors should have taken reasonable precautions to verify that their agents followed financial services legislation in February 2022. As a consequence, XTrade staff used unethical tactics to encourage customers to deposit and exchange more money than they had meant.

ASIC has found that both Zakhaim and Anderson need more fitness, suitable training, and competence in order to offer financial services and function as officers or controllers of a financial services organization. The restriction on these persons is part of ASIC's continued commitment to maintain high standards of judgment, diligence, and professionalism among AFS licensee officials.

Zakhaim and Anderson have the option to challenge ASIC's judgment to the Administrative Appeals Tribunal. Their bans are also documented on ASIC's banned and disqualified registry.

Background

ASIC revoked XTrade's AFS license on April 26, 2024. Contracts for difference (CFDs) are leveraged derivative contracts that enable customers to bet on changes in the value of underlying assets such as foreign exchange rates, stock market indexes, individual stocks, commodities, or crypto assets. To combat corruption in the retail over-the-counter (OTC) derivatives industry, ASIC has initiated several enforcement proceedings against issuers over the years. In addition to these legal measures, ASIC issued the CFD product intervention order (PIO) on March 29, 2021, which restricted CFDs issued and distributed to retail customers.

Related news:

ASIC Cancels AFS License of XTrade.AU Due to Client Misconduct

ASIC cancels XTrade.AU's AFS license after findings of client exploitation and regulatory breaches, leaving the company under review by AAT.

Exposure 2024-06-06

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The suspension of Zakhaim and Anderson demonstrates ASIC's dedication to safeguarding customers and upholding the integrity of the financial services sector. The regulator's actions serve as a stark warning to all financial services professionals about the necessity of compliance and the serious implications of failing to meet regulatory requirements.