BUSN2101 Business Law Report: ASIC vs. One Tech Media, 2020

This report analyzes the case of Australian Securities and Investments Commission (ASIC) v. One Tech Media Ltd, focusing on the violation of the Corporations Act and the ASIC Act. One Tech Media offered binary options through "www.titantrade.com" without the required Australian Financial Services Licence (AFSL), engaging in misleading conduct. The report details the involvement of Allianz Metro Pty Ltd, Yoav Ida, and Eustace Senese in facilitating fund collection, breaching various sections of the Corporations Act, including 766C, 766E, and those related to directors' duties (Sections 180-183) and misleading conduct (Sections 1041H, 1041E, and 1041G). The report also highlights the application of Section 12CB of the ASIC Act regarding unconscionable conduct. The court's ruling provides clarity on the definition of "arranging for a financial product" and emphasizes the comprehensive nature of Corporations Law in protecting stakeholders. The judgment serves as a landmark in addressing the exploitation of consumers through unclear areas in the law. The report concludes that the Corporations Law is comprehensive, and its provisions are interpreted broadly to penalize wrongdoings.

BUSINESS LAW

Newspaper Report
АSIC wins in binary options case against One Tech Media, Allianz Metro, Eustace Senese
and Yoav Ida.
Steffy Bogdanova, February 7, 2020.
Finance Feeds
Link for the article: https://www.leaprate.com/binary-options/regulation/%D0%B0sic-wins-
in-binary-options-case-against-one-tech-media-allianz-metro-eustace-senese-and-yoav-ida/

The article chosen for the analysis relates to the company One Tech Media Limited (OTML)
and the alliance Allianz Metro Pty Ltd. The news piece relates to the violation of the various
sections of the Corporations Act and the ASIC Act by the companies. The Australian
Companies Affairs Regulator that is Australian Securities & Investments Commission
(ASIC) had filed the case against the mentioned companies and others regarding the sale of
binary options to the consumers of Australia in a pressurised and thus unauthorised manner.
The case can be identified as Australian Securities and Investments Commission v One Tech
Media Ltd1.
It is to be noted that the company had offered the binary options to the consumers of
Australia through the website “www.titantrade.com” without securing the Australian
Financial Services Licence (AFSL) and the requisite disclosure of the products. Thus, the
case represents an attempt to mislead the consumers by the dishonest conduct, misleading
representations and statements. In addition to the company above, those engaged in the
agency services for the “arranging for issuance of the binary options” were also found to have
breached the Corporations Act. It was stated in the ruling that Allianz Metro Pty Ltd, the
Australian Company, along with Yoav Ida and Eustace Senese were also involved in the
breach of the Corporations Law as they enabled the company OTML in the collection of the
funds. The agency services provided by the company included provision of bank accounts in
which the deposit funds would be received, examination of the information about the
customers, and the overall facilitation regarding the remittance of customer funds. The above
activities constituted an integral part to the trade of the binary options. It has also been stated
in the article that the primary research is evident of the deliberate concealment of the material
information with an aim to deceive the customers and collect funds, with no option to recover
the same. In a further move, the Australian company watchdog is seeking the above
mentioned accused to pay the civil penalties along with seeking an order to disqualify such
mediators to set an example in the industry.
It is to be noted that for the above ruling the Section 766C (2) of the Corporations Act, 2001
was quoted and was stated to have a broad and unrestricted meaning. As per Section 766C (1)
of the Corporations Act refers to a person “dealing” in a financial product when the said
financial products are issued2. Section 766C (2) further provides a broad meaning to the
dealing in the financial product by including the persons that “arranged for” such a dealing3.
1 Australian Securities and Investments Commission v One Tech Media Ltd [2020] FCA 46
2 S 766C(1) Corporations Act 2001 (Cth)
3 S 766C(2) Corporations Act 2001 (Cth)

In addition to the applicability of the above, the Section 766E (1) is also applicable in relation
to the provision of the custodial or depository service which is again material for any
financial product4. Not only the above issue raises the questions on the above sections but
also highlights the failure on the part of the directors of the company Allianz Metro Pty Ltd
to fulfil the general duties as mentioned in the Sections 180, 181, 182 and the 183 of the act.
This is because the directors of the above mentioned companies were working with an aim to
misappropriate the money of the consumers for their personal purposes using the company
structure, and thus showing a complete disregard for the ethical and requisite conduct.
Further in relation to the misleading and the dishonest conduct, the applicable section of the
Corporations Act that were breached were the Sections 1041H, 1041E and 1041G5.
Some of the additional applicable sections from the other acts are listed as follows as
mentioned by Justice Davies in the ruling. The Section 12CB of the ASIC Act mentions the
test for the unconscionable conduct as to something done which falls beyond the ambit of the
acceptable commercial behaviour norms and the one that is not in the line with the
conscience6. The above mentioned section is applicable because the company OTML
engaged in pressurising the investors to invest the hard earned funds in the risky trading of
the binary options in which the probability of the losses was too high. Thus, the above
judgement is a landmark judgement in the recent times as it provides the clarity on what
constitutes as to the “arranging in for a financial product.” It has been quoted by the industry
experts that the above litigation has provided a much needed clarity on the grey areas in the
Corporations Law, which the companies and directors use for the exploitation of the
consumers7.
The discussions conducted in the previous parts lead to the conclusion that the Corporations
Law is a comprehensive law for the company related matters and time and again the
expression of the various provisions is done in a manner to provide wide connotation in the
interests of the stakeholders at large. As evident in the article chosen for analysis, the
4 S 766E Corporations Act 2001 (Cth)
5 "Australian Securities And Investments Commission V One Tech Media Ltd [2020] FCA 46 (5 February
2020)", Austlii (Webpage, 2020) <http://www9.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/2020/46.html>.
6 Steven Rice and Fiona Smedley, "Federal Court Provides Helpful Guidance On A Range Of AFSL
Concepts", Herbert Smith Freehills | Global Law Firm (Webpage, 2020)
<https://www.herbertsmithfreehills.com/latest-thinking/federal-court-provides-helpful-guidance-on-a-range-of-
afsl-concepts?utm_source=Mondaq&utm_medium=syndication&utm_campaign=LinkedIn-integration>.
7 Celeste Skinner, "Federal Court Rules In ASIC’S Favour Against One Tech Media Ltd", Finance Magnates |
Financial And Business News (Webpage, 2020)
<https://www.financemagnates.com/binary-options/regulation/federal-court-rules-in-asics-favour-against-one-
tech-media-ltd/>.

applicable sections have been construed broadly so as to penalise the companies and directors
for the wrong doings.

Bibliography
Acts
Corporations Act 2001
Cases
Australian Securities and Investments Commission v One Tech Media Ltd [2020] FCA 46
Other sources
"Australian Securities And Investments Commission V One Tech Media Ltd [2020] FCA 46
(5 February 2020)", Austlii (Webpage, 2020)
<http://www9.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/2020/46.html>
Celeste Skinner, "Federal Court Rules In ASIC’S Favour Against One Tech Media
Ltd", Finance Magnates | Financial And Business News (Webpage, 2020)
<https://www.financemagnates.com/binary-options/regulation/federal-court-rules-in-asics-
favour-against-one-tech-media-ltd/>.
Rice, Steven and Fiona Smedley, "Federal Court Provides Helpful Guidance On A Range Of
AFSL Concepts", Herbert Smith Freehills | Global Law Firm (Webpage, 2020)
<https://www.herbertsmithfreehills.com/latest-thinking/federal-court-provides-helpful-
guidance-on-a-range-of-afsl-concepts?
utm_source=Mondaq&utm_medium=syndication&utm_campaign=LinkedIn-integration>