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ASIC, the Australian financial regulator, has taken decisive action against CFDs broker Prospero Markets Pty Ltd, seeking a court order to wind up its operations. The move follows an intensive investigation initiated after the Australian Federal Police’s Operation Avarus-Nightwolf uncovered money-laundering charges against former officers and responsible managers of Prospero Markets in October 2023.
The regulatory body, ASIC, expressed a spectrum of concerns regarding Prospero’s business management, particularly its compliance with Australian Financial Services (AFS) License conditions and obligations under the Corporations Act as an OTC derivatives issuer. Prospero’s AFS license was suspended in December 2023 due to its failure to submit audited financial accounts for the year.
Investigative Background: Uncovering Financial Irregularities
The investigation into Prospero Markets commenced following revelations from the Australian Federal Police’s Operation Avarus-Nightwolf, which resulted in charges of money laundering against former officers and responsible managers. These charges, unearthed in October 2023, triggered heightened scrutiny into Prospero’s financial activities, casting doubts on its compliance with regulatory standards.
ASIC’s primary concern lies in the substantial client funds held by Prospero. To ensure the efficient return of these funds to clients, ASIC has applied to appoint Andrew Cummins, Jonathon Keenan, and Peter Krejci of BRI Ferrier as joint and several liquidators. Notably, BRI Ferrier has previous experience handling similar cases, having overseen the liquidation of another Australian Retail FX and CFDs broker, USGFX.
Prospero Markets; License Suspension and Compliance Struggles
The matter is set for a hearing in the Federal Court on 20 March 2024, signifying a critical juncture in Prospero’s fate. The suspension of Prospero’s AFS license, effective until 28 February 2024, reflects the gravity of the situation. The company has committed to refraining from handling client funds without regulatory approval.
Prospero’s downfall stemmed from its failure to lodge its annual financial statement and audit report for the financial year ending 30 June 2023 within the prescribed timeframe, as required by its AFS license conditions. This failure prompted ASIC’s investigation into suspected violations dating back to March 2021.
ASIC has made it clear that if Prospero fails to comply with the financial reporting requirements during the suspension period, further actions, including extending the suspension or revoking the license entirely, will be considered.
The ASIC’s pursuit of a winding-up order underscores its commitment to maintaining integrity and transparency within Australia’s financial markets. The regulator’s vigilance serves to protect investors and uphold the standards expected of financial service providers. As the case unfolds, stakeholders await the Federal Court’s decision, which will undoubtedly have far-reaching implications for both Prospero Markets and the broader retail forex industry.
