it is easier to register as an online trading company than to open a bank account.
LESS than a month after the corporate watchdog warned consumers to be wary of fake broking firms, it has moved to shut down a website that purports to offer foreign currency dealing.
There is little doubt that the website, actcfx.com, has unashamedly ripped off the name and registration of an identically named group, A/C Trading co, of Indiana in the US.
The ”real” A/C Trading was in fact one of the complainants to the Australian Securities and Investments Commission over the hijacking of its name. ASIC then discovered the site also claimed it had an ”ASIC” registration. in fact, it needs an Australian Financial Services Licence – and had none.
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ASIC also received a handful of complaints from consumers who apparently had become customers and, sadly but not surprisingly, struggled to get their money back.
When ASIC went for an injunction in the NSW Supreme Court on Monday to stop the site taking any more money from mug punters, and to force it to put up corrective notices, no one from AC Trading actually appeared.
The injunction extended to freezing the assets of the company and two men associated with it – Jiahao Wang and Xiao Dong Pan. ASIC sources said that by late yesterday afternoon, there had been no legal notification from the company or the men that they intended fighting the order. there has also been no change to the status of the website, and ASIC is due to return to court on Monday for final orders to close it off.
Wang is, according to ASIC records, the sole director and registered owner of AC Trading. a phone call to a recent address listed by him elicited the response that his son was sharing a house there, but that Wang had recently headed back to Chengdu in China.
Xiao was unable to be found – but it is believed that ASIC has had a similar lack of success with him and Wang. Xiao, while not a director of AC Trading, has a company called Trading Capital Group, which he registered in March this year.
Oddly enough, there is a Brooklyn-based company called Trading Capital Group registered with the National Futures Association in the US, just like AC Trading.
The AC Trading case is a classic example of the difficulties of regulating semi-sophisticated scamsters on the internet. it also highlights a gaping hole in our corporate law that ASIC has been looking at but the politicians have yet to fix – that if you register a company with an online broker there is absolutely zero verification of identities, addresses or anything else.
The only checking done is whether the company name that you are trying to register is not already in use. after that it takes less than 10 minutes to get to the stage where you hand over your credit card details. I did it yesterday, using random names and addresses, with the same online brokerage Xiao used to register Trading Capital.
The broker is New Zealand based and owned. its only Australian presence is a post office box in Hawthorn – and a nominal office at a nearby accounting firm.
None of what the registrars do is illegal. they are among many similar service providers that take no responsibility for knowing anything about their clients other than that they have a valid credit card. their terms and conditions explicitly state that responsibility for all information rests with the client.
It is a bizarre situation given the hoops that the average person has to go through to prove their identity when opening basic bank, electricity, gas, phone or other accounts. and the beauty of the internet is that once you have registered that company, truthfully or not, you can then buy a website through another broker who will cover all tracks back to you (without a court order) by keeping your details off the publicly available global register of domain names.
The bogus AC Trading site was registered in Alberta, Canada – the only identity is an email address, jack37605@gmail.com.
Coincidentally that same email address appears to be the contact point for several other trading websites. One of these, hedgehl.com, gives its address as a post office box in Apia, Samoa. by one of those freak coincidences, it also has a namesake company, Hedgeharbor Inc, registered to trade with the NFA in the US, but its own website does not seem to have a Samoa address.
Here is a clue for consumers, though – a good start to sorting the scam sites from the genuine, apart from double-checking whether the brokers are actually licensed to trade, is to navigate quickly away from anyone offering absurd free prizes and deals.
Let’s be honest – foreign exchange trading is a game of millimetres; you have to trade lots of money on very narrow margins to make a profit. Nobody running a sensible forex book is going to allow you to double your bet using their money – unless, of course, you are guaranteed to lose.
