ASIC has obtained permanent injunctions and orders, by consent, against Capital Intelligence Ltd, formerly Hometrader Ltd, preventing it from publishing misleading or deceptive notices about financial products.
ASIC has obtained permanent injunctions and orders, by consent, against Capital Intelligence Ltd, formerly Hometrader Ltd, preventing it from publishing misleading or deceptive notices about financial products.
ASIC said the injunctions and orders also apply to John Day and Jason Davis who are both directors of Capital Intelligence, which trades as HomeTrader.
The corporate regulator said it had obtained the orders in the Federal Court in Western Australia after investigating the company and raising concerns about advertisements which contained statements about investment returns without adequate qualifications or disclaimers.
Subiaco-based HomeTrader provides education and systems training for individuals wanting to trade shares from home.
It has six offices in Australia, including one in Busselton.
According to ASIC records, Capital Intelligence had revenue of $7.5 million for the year ending June 30, up from $7 million the previous year.
The company made a $303,037 loss in 2004-05, following a $209,255 net profit the year before.
this is a full copy of the ASIC announcement which appeared on its website:
ASIC stops misleading advertising
Wednesday 23 November 2005
The Australian Securities and Investments Commission (ASIC) has obtained permanent injunctions and orders, by consent, against Capital Intelligence Ltd, Mr John Day and Mr Jason Davis, preventing them from publishing misleading or deceptive notices about financial products.
ASIC obtained the orders in the Federal Court in Western Australia following an investigation into the activities of Capital Intelligence. Capital Intelligence operates a number of businesses which relate to the provision of financial product advice to retailers and investors. One of the businesses, HomeTrader, offers training courses on share trading.
ASIC was concerned about the overall message of the advertisements, published between April to August 2005, given inadequate qualifications or disclaimers were provided. The advertisements contained statements such as, 'Learn how to choose shares that make money', 'Making Money on the Stock Market', and 'Like to see how people achieve 100% returns and more in 3 months'. The advertisements also quoted significant profits and percentage returns allegedly made by people who 'took action and got educated' and invited readers to attend a free introductory class.
ASIC's investigation revealed that the profits stated in the advertisements were not made from trading shares on the stock exchange but from trading contracts for differences (CFDs).
Capital Intelligence, Mr Day and Mr Davis consented to:
a declaration that Capital Intelligence published notices in relation to a financial product that were misleading or deceptive or were likely to mislead or deceive, by representing in the notices that people had profited from trading stocks on a stock exchange, whereas the profits were obtained from trading CFDs;
a declaration that Mr Day and Mr Davis were knowingly concerned in Capital Intelligence's contravention;
permanent injunctions that stop Capital Intelligence, Mr Day and Mr Davis making representations or being in any way involved in conduct by another person publishing any notice or advertisement or making any written or verbal statement which indicates that certain profits or returns have been made in the course of share trading, unless those profits or returns were made in the course of trading shares and not made in the course of trading any other financial product;
an order requiring Capital Intelligence to send notices to every person who, on or after 1 June 2003, paid a subscription to the services being offered by Capital Intelligence; and
an order requiring Capital Intelligence to publish corrective advertisements in metropolitan and regional editions of The Age, The Sunday Times (Western Australia), The West Australian, The Sydney Morning Herald, The Adelaide Advertiser and the Australian Financial Review.
ASIC's Executive Director, Ms Jan Redfern said it was imperative that advertisements placed in the media by all financial product advisers were completely accurate and true, and were not misleading.
'ASIC is committed to pursuing companies that fail to provide consumers with clear and accurate information about the nature of the financial advice offered and the potential returns that can be achieved from that advice', Ms Redfern said.
ASIC was awarded costs in the matter.
As a condition of its Australian Financial Services Licence, Capital Intelligence is a member of the Financial Industry Complaints Service (FICS), an external dispute resolution scheme that is available to help consumers resolve any ongoing complaints relating to members of the financial services industry. Consumers can contact FICS via www.fics.asn.au or Tel. 1300 780 808.
Background
These proceedings follow an ASIC investigation into newspaper advertisements that represented that persons named in the advertisements had made profits from the trading of shares on the stock exchange and encouraged persons to become members of Capital Intelligence to learn the strategies on how to make these profits.
ASIC alleged the newspaper advertisements were misleading because they conveyed the impression that the quoted high returns were obtained by buying and selling shares, when in fact the returns were made by the trading of contracts for differences (CFDs). Unlike a direct investment in shares, CFDs expose an investor to the possibility of losses significantly greater than the initial investment.
