Offshore firms pay $4M for unregistered trading of contracts for difference

A pair of unregistered offshore trading firms are paying over $4 million to settle allegations that they violated securities law by allowing Ontario investors to trade contracts for difference (CFDs) on their platform.

An Ontario Securities Commission (OSC) hearing panel approved a proposed settlement with the firms — Vantage Global Prime Pty Ltd. (VGP) and Vantage International Group Ltd. (VIG) — which operated the Vantage FX platform.

The settlement resolves allegations that they violated Ontario securities law by opening accounts for investors and selling them CFDs without registration or a prospectus.

Under the settlement, the firms have disgorged the US$3 million in revenue that they generated from serving investors in Ontario without registration. They also agreed to pay a C$600,000 penalty and C$10,000 in costs.

Alongside the sanctions, the firms agreed to return any unclaimed funds that remain in Ontario accounts or, if that’s not possible, donate the unclaimed funds to Junior Achievement Canada or a similar charity.

According to the settlement, VGP stopped operating in Ontario in 2019 following a warning from the Australian Securities and Investments Commission about unregistered offshore activity. However, the firm allowed investors to continue trading by transferring affected clients to its Cayman Islands–based affiliate, VIG.

“Regardless of the location of their home base, offshore platforms offering services to Ontarians are subject to Ontario’s securities laws,” said Jeff Kehoe, director of enforcement with the OSC, in a statement.

“We will take corrective action against firms that try to ‘jurisdiction shop’ and fail to comply with our laws,” he said. “These companies cannot avoid their regulatory obligations by relocating their operations.”

In approving the settlement, the panel said the alleged breaches of Ontario securities law are “serious” and that the proposed sanctions are “proportionate” to the violations. It also ruled that the terms of the settlement will serve as a deterrent for similar misconduct.

Additionally, the panel noted that the firms cooperated with OSC staff and also took remedial action, including measures to close all Canadian investor accounts without imposing any withdrawal or transaction fees, and blocking Canadian investors from opening new accounts.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.