Last updated on August 8, 2023
Australia’s securities regulator, the Australian Securities and Investments Commission (ASIC), has filed a lawsuit against eToro’s Australian entity, eToro Aus Capital Limited. The regulatory authority has raised concerns over alleged breaches of Australian financial services laws.
eToro, a popular social investing platform, is facing allegations of operating an unlicensed financial services business in Australia. ASIC alleges that eToro Aus Capital Limited has been offering contracts for difference (CFD) products without the necessary authorization.
CFDs are complex financial instruments that allow investors to speculate on the price movements of various underlying assets, such as stocks, indices, or commodities, without actually owning the assets. These instruments often involve high levels of leverage and risk.
According to ASIC, eToro Aus Capital Limited did not hold an Australian Financial Services (AFS) license and failed to comply with the necessary regulations for offering CFD products in the country. The regulatory body argues that eToro’s actions may have put Australian investors at risk and resulted in potential harm to their financial interests.
ASIC is seeking various declarations from the Federal Court of Australia to address these alleged breaches. If successful, the regulator’s legal action could lead to penalties, financial compensation, or other remedies for affected investors.
In response to the lawsuit, eToro has acknowledged ASIC’s concerns and expressed its commitment to regulatory compliance. The social investing platform has initiated discussions with the regulator to address the issues raised and work towards a resolution.
eToro, originally founded in Israel, has gained popularity in recent years as a user-friendly platform that allows retail investors to engage in social trading. The platform enables users to interact, follow, and copy the investment strategies of other successful traders.
This regulatory action is a reminder of the importance of complying with local financial regulations when operating in different jurisdictions. Investors should also exercise caution and conduct due diligence when choosing investment platforms, ensuring they are adequately licensed and regulated to operate in their respective countries.
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