A panel of the Ontario Securities Commission (OSC) confirms that it has approved a settlement agreement with Vantage Global Prime Pty Ltd (VGP) and Vantage International Group Ltd (VIG) for selling contracts for difference (CFDs) to Ontario investors in an improper manner.
The settlement agreement has come after allegations that the two firms had violated Ontario securities law by taking part in unregistered trading of CFDs, and by issuing and distributing such products to Ontario investors without sharing a prospectus. CFD issuers like VGP and VIG are required to adhere to appropriate registration and prospectus guidelines as outlined in the Securities Act (Ontario) or rely on exemptions from those requirements.
It’s vital that foreign market participants, such as online trading platforms, identify and adhere to applicable domestic securities laws. VGP and VIG were foreign-headquartered companies that provided unregistered/unauthorized online trading platforms under the name “Vantage FX” and permitted Ontario residents to trade CFDs.
While responding to a notice from its licensor, the Australian Securities & Investments Commission (regarding the legal status of its overseas offerings), the VGP ceased its Ontario operations, however, it gave Ontario investors the option to be transferred to its Cayman affiliate, VIG. The Ontario investors that didn’t shut down their accounts kept trading CFDs on VIG’s “Vantage FX” online trading platform.
Jeff Kehoe, Director of Enforcement at the OSC, stated:
“Regardless of the location of their home base, offshore platforms offering services to Ontarians are subject to Ontario’s securities laws. We will take corrective action against firms that try to ‘jurisdiction shop’ and fail to comply with our laws. These companies cannot avoid their regulatory obligations by relocating their operations.”
As part of the settlement, VGP and VIG will pay a CAD 600,000 administrative penalty and have agreed to disgorge USD 3 million. Additionally, the firms agreed to pay another CAD 10,000 (for the cost of the OSC’s investigation).
Both firms also added considerable internal controls and procedures in order to prevent Ontario residents from creating new accounts.
The mandate of the OSC is to ensure investor protection from unfair, improper or fraudulent activities, to support fair, efficient and competitive capital markets while maintaining confidence in the capital markets, to encourage capital formation, and to ensure the stability of the financial system (and lowering systemic risk).
Investors have been asked to check the registration of any individuals or firms providing an investment opportunity and to look at the OSC investor materials accessible here.