Game comes with big cost
LIFEWEALTH8, a "digital marketing company" has won the Australian Securities and Investment Commission’s award for the most outrageous financial scheme of the past 12 months.
The company was offering "an outstanding life enrichment opportunity via the Internet that included a simulated stock market and simulated shares but using real money.
Unfortunately Lifewealth8’s simulated stock market is not all that simulated.
One Australia player tried to cash out her gains but Lifewealth8 made a host of excuses and did not pay up.
Even the company’s basic registration details appeared to be "simulated".
The scheme was first nominated for the ASIC Pie in the Sky awards in 2003. Back then it claimed to be incorporated in Malta.
The Maltese authorities told ASIC that no such company was registered there.
These days Lifewealth8 claims to be registered as Wealth 8 Limited in the British Virgin Island. That nation’s authorities have told ASIC that no such company is registered there.
The company president and founder also claimed to have an accountancy degree from Malta. The Maltese authorities say the local university has no record of giving such a degree to the person concerned.
ASIC executive director of consumer protection Peter Kell said stock market games played with real money offered none of the protections of genuine markets.
"If you want to invest stick to the real thing where you can easily check company details and get the protection of dealing through licensed markets and licensed financial services businesses," he said.
"Furthermore, because it’s a game and based overseas it falls outside ASIC’s legal coverage.
"It bears all the hallmarks of a pyramid scheme based around incentive payments for getting other people to play.
"ASIC issued a warning to the public in March 2003 when we received complaints that Lifewealth8 was recruiting members in Australia."
No licence, no business warning
THE Australian Securities and Investments Commission has provided an update on the progress of Australian financial services licence applications.
To date the commission has issued more than 2,500 licences with more than 1,000 applications being assessed. The vast majority of those are expected to receive their licence by the March 10 deadline.
ASIC executive director financial services regulation Ian Johnston said the commission was still expecting up to 900 applications from existing licensees and insurance brokers.
The commission is now contacting each of those potential applicants as their registration and/or licence will lapse on March 11.
The Financial Services Reform Act prohibits financial services businesses from operating without an AFS licence from March 11.
The penalty for operating without a licence is a $22,000 fine, two years jail or both.
The assessment process for these applicants is relatively simple and ASIC anticipates applications lodged before the end of January will be assessed by the deadline.
Prospective licensees who are expected to lodge a full application for a new AFS licence need to contact ASIC urgently if they intend to continue their business beyond March 10.
The ASIC contact is director of licensing and business operations Pauline Vamos.
"During the two-year transition period of the FSRA, ASIC has consistently warned financial services business to lodge their licence applications as early as possible. We have provided extensive guidance to help industry make their transition to the new licensing regime," Mr Johnston said.
After March 10 ASIC will target businesses that are illegally operating without a licence or otherwise not complying with financial services law.
ASIC investigating NAB
THE Australian Securities and Investments Commission has confirmed that it has commenced an investigation into whether there have been any contraventions of the Corporations Act by employees of National Australia Bank involved in foreign exchange options training.
ASIC is also inquiring into whether the NAB properly informed the market about this matter and its consequences.
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