U.Today - The Australian Securities and Investments Commission's (ASIC) recently lawsuit against is yet another push by the regulator to safeguard the interests of its retail investors. According to the market regulator, charges were filed with respect to its Contract for Difference (CFD) products.
ASIC Complaints against eToro
According to the ASIC, the trading company broke design and distribution obligations as well as its license obligations to act honestly, fairly and efficiently. The regulator claimed that it is investigating eToro to see if it properly screened its target market to consider them fit for its CFD products.ASIC is concerned that eToro might have maintained a far broader net of customers for such high-risk and volatile trading products. Concerned that the CFD is a market where most traders lose their funds, ASIC said it is unsure whether or not eToro conducted the right tests to properly categorize the users it permitted to trade the product.
To buttress its point, ASIC noted that as many as 20,000 of eToro's customers lost their funds between Oct. 5, 2021, and June 14, 2023.
Per the suit, ASIC is '"seeking declarations and pecuniary penalties from the court."
Global tightening for exchanges
With eToro being the latest trading entity charged by a federal regulator, it shows that the crackdown on exchanges is more or less a global affair.The U.S. SEC has charges against the duo of Binance and Coinbase (NASDAQ:COIN) exchanges, extending its stance from earlier in the year when it with Kraken exchange.