Class action launched against IG Markets over CFDs

Class action launched against IG Markets over CFDs

Photo: Wance Paleri, via Unsplash.

Piper Alderman and legal finance firm Omni Bridgeway (ASX: OBL) have started a class action against IG Markets Limited, alleging the UK-backed finance group marketed and facilitated the trading of complex contracts for difference (CFDs) to inexperienced investors.

The firms have commenced proceedings in the Victorian Registry of the Federal Court of Australia on behalf of up to 20,000 everyday Australian investors who collectively lost an estimated $800 million trading CFDs, based on data from the Australian Securities and Investments Commission (ASIC).

Hundreds of affected individuals have already registered for the class action in relation to these leveraged financial products, whereby an investor pays only a fraction of what the underlying asset is worth and speculates on whether it will go up or down in value.

Following an in-depth investigation spanning a number of months, the claim alleges that IG Markets failed to adequately assess investors’ objectives and financial situations, and inadequately disclosed the risks of CFDs until the corporate watchdog brought in strict conditions for these financial products in March 2021 to protect inexperienced investors.

Those conditions introduced by ASIC found that 72 per cent of retail clients who traded CFDs lost money.

To date the regulator has brought proceedings against a number of CFD licensees operating in Australia in relation to historical conduct, with penalties awarded in excess of $75 million.

The claimants note CFDs have also been banned in some other countries, including the US, and are likened to gambling on financial markets. The Federal Court of Australia has described these products as “financial heroin hits” in the hands of unsophisticated retail investors.

"There is evidence that highly leveraged CFDs should never have been marketed to everyday Australian investors who had little or no experience in trading such complex products," says Piper Alderman partner Kate Sambrook.

"The class action seeks to provide a remedy and recover these losses for retail investors who should never have been exposed to trading in such complex, high-risk products."

 

Enjoyed this article?

Don't miss out on the knowledge and insights to be gained from our daily news and features.

Subscribe today to unlock unlimited access to in-depth business coverage, expert analysis, and exclusive content across all devices.

Support independent journalism and stay informed with stories that matter to you.

Subscribe now and get 50% off your first year!

Four time-saving tips for automating your investment portfolio
Partner Content
In today's fast-paced investment landscape, time is a valuable commodity. Fortunately, w...
Etoro
Advertisement

Related Stories

“I feel exposed and unsettled”: Medibank hit with yet another class action over cyberattack

“I feel exposed and unsettled”: Medibank hit with yet another class action over cyberattack

Thousands of current and former Medibank (ASX: MPL) customers have ...

Gordon Legal and Hayden Stephens and Associates team up to investigate Latitude legal action

Gordon Legal and Hayden Stephens and Associates team up to investigate Latitude legal action

Two Australian law firms have joined forces to investigate the poss...

Optus hit with Slater and Gordon class action over last year’s data breach

Optus hit with Slater and Gordon class action over last year’s data breach

Telco Optus has been hit with a class action from law firm Slater a...

Shine launches class action against QSuper

Shine launches class action against QSuper

Members of QSuper have filed a class action against the super fund ...