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FMA reprimands FX firm Cambrian

NZ NewswireNZ Newswire 20/05/2016 Paul McBeth

The Financial Markets Authority has issued a direction order to foreign exchange education firm Cambrian Corp to change the way it markets itself, which the market watchdog said was either misleading or deceptive and made unsubstantiated claims about its services.

The market supervisor's notice orders Auckland-based firm to ensure all marketing materials make clear that FX trading "cannot be relied upon to provide substantial profits quickly and consistently", is high risk, and that those risk disclaimers are prominent enough to be seen. Cambrian is jointly owned by Greg Pascoe and director Jade Lynn, and its website says it offers "an education system to teach you how to navigate trading platforms and the foreign exchange markets."

The order says Cambrian agreed to remove misleading and unsubstantiated representations when the FMA gave notice that intended to issue a direction in March, but that the firm's marketing "continue to provide a dominant message that forex trading provides an easy way to profit from financial markets" without adequate balance of the risks involved.

The order said the FMA was concerned Cambrian didn't seem to accept the misleading nature of the marketing, and that when asked to substantiate claims there wasn't enough evidence to back them up.

The regulator was also concerned that testimonials were from family and friends of the company's director who been some way through the process but hadn't traded using the strategy.

"From the clients we interviewed and trades we analysed, the FMA did not find any evidence that Cambrian's strategy resulted in the claimed returns," director of regulation Liam Mason said in a statement. "The direction order was a proportionate response necessary to ensure that investors who wish to engage with Cambrian have access to information that is correct and not misleading in any way."

The FMA can grant direction orders where it's satisfied a person or company has or is likely to breach part of the Financial Markets Conduct Act.

The market watchdog has been cracking down on foreign exchange firms, some of which have been kicked off the Financial Services Provider Register for not providing local services, while last year it launched a probe into FX firm Arena Capital over fears investor funds were at risk.

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