Appendix A - Defined Terms
The following terms are defined in the Reasons for Judgment (paragraph references are to paragraphs in the Reasons):
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1. A Book: [54] an internal categorisation at USG for customer trades, including those made via a CAR, which were hedged with a hedging counter-party;
2. AFSL: [1] an Australian Financial Service Licence, which authorises the licensee to provide particular financial services;
3. B Book: [54] an internal categorisation at USG for customer trades, including those made via a CAR, which were not hedged with a hedging counter-party;
4. Bank Account Representations: [942] a category of representations that were alleged to constitute false or misleading representations or to amount to misleading or deceptive conduct, comprising representations to the effect that it was reasonably likely, or that there was a reasonable prospect, that customers would generate greater returns by investing their money with EuropeFX or TradeFred (as the case may be) by trading CFDs or Margin FX Contracts than by keeping it in a bank account, i.e. an account with an Australian deposit-taking institution;
5. Bonus Representations: [958] a category of representations that were alleged to constitute false or misleading representations or to amount to misleading or deceptive conduct, comprising representations to the effect that customers would receive and would be reasonably able to access "Bonus Credits" when they deposited a certain amount of money to their trading account;
6. CAR: [31] a corporate authorised representative, a status which authorises the CAR to provide particular financial services on behalf of the holder of the AFSL, subject to the terms of the AFSL;
7. CFD or Contract for Difference: [1], [76]-[78] an "over-the-counter" derivative financial product, being a contract between a market maker and a trader to exchange, at the closing of the contract, the difference between the opening and closing prices of the underlying asset, multiplied by the number of units of that asset specified in the contract.
8. Deposit Statement: [817] a category of alleged personal advice statements, comprising statements to the effect that customers should deposit further funds to, or not withdraw funds from, their trading account;
9. Equities Representations: [938] a category of statements that were alleged to constitute false or misleading representations or to amount to misleading or deceptive conduct, comprising representations to the effect that, by reducing investments in equities (including those held in a superannuation account) and increasing investment in the derivatives products offered by EuropeFX (or TradeFred as the case may be): (i) customers would reduce their exposure to risk; or (ii) it was reasonably likely, or there was a reasonable prospect, that customers would increase their returns;
10. Location Representations: [954] a category of statements that were alleged to constitute false or misleading representations or to amount to misleading or deceptive conduct, comprising representations to the effect that: (i) EuropeFX (or TradeFred, as the case may be) had main offices, headquarters or offices from which it conducted a substantial part of its business located in Australia; or (ii) the account managers were located in Australia;
11. Loss Recovery Representations: [934] a category of statements that were alleged to constitute false or misleading representations or to amount to misleading or deceptive conduct, comprising representations to the effect that: (i) positions that had moved against a customer represented only "temporary" losses, and that it was reasonably likely, or that there was a reasonable prospect, that such positions would become profitable; or (ii) it was reasonably likely, or there was a reasonable prospect, that customers would generate, from trading CFDs or Margin FX Contracts, profits sufficient to recover realised and unrealised losses suffered by the customer from their trading;
12. Margin FX Contract or Margin Foreign Exchange Contract: [1], [79] an "over-the counter" derivative financial product, being a contract between a market maker and a trader to exchange, at the closing of the contract, the difference between the opening and closing value of one currency relative to another currency, multiplied by the number of units specified in the contract.
13. Money Risk Representation: [926] a category of statements that were alleged to constitute false or misleading representations or to amount to misleading or deceptive conduct, comprising representations to the effect that, with regards to the risk associated with depositing money to a trading account: (i) by increasing the amount of money in the customer's trading accounts, customers would reduce the level of risk to which they were exposed; (ii) the risk associated with transferring additional funds to the customer's trading account would carry an equivalent risk to holding money in a bank account, i.e. an account with an Australian deposit-taking institution; or (iii) only those funds in the customer's trading account used to open CFD or Margin FX Contract positions would be exposed to adverse movement in the price of the asset underlying the relevant position;
14. MT4: [36] the online trading platform through which EuropeFX offered trading in CFDs and Margin FX Contracts.
15. PDS: [33] a Product Disclosure Statement for a financial product;
16. personal advice statements: [103] - [104] statements that were alleged to constitute "personal advice", as defined by s 766B(3) of the Corporations Act, comprising the categories of Deposit Statements, Position Statements, Signal Provider Statements, and Trading Strategy Statements. The personal advice statements were particularised in Annexure A.1 to the SOC;
17. Statement of Narrowed Case: [846] the Statement of Narrowed Case with respect of EuropeFX, filed by ASIC on 22 August 2024;
18. Plan Representations: [946] a category of statements that were alleged to constitute false or misleading representations or to amount to misleading or deceptive conduct, comprising representations to the effect that a plan would be developed, or had been developed, for the customer which was designed to meet the customer's objectives or needs and improve the customer's financial position;
19. Position Statements: [810] a category of the alleged personal advice statements, comprising statements to the effect that customers should open, close or leave open specific CFD or Margin FX Contract positions;
20. Profit Representations: [917] a category of statements that were alleged to constitute false or misleading representations or to amount to misleading or deceptive conduct, comprising representations to the effect that it was reasonably likely, or that there was a reasonable prospect, that customers would generate, from trading CFDs or Margin FX Contracts: (i) profits consistent with a specific figure or percentage return on investment stated by the account manager; (ii) income sufficient for the customer's trading to be their main source of income; or (iii) income sufficient to constitute a "secondary income";
21. Regulation Representations: [950] a category of statements that were alleged to constitute false or misleading representations or to amount to misleading or deceptive conduct, comprising representations to the effect that EuropeFX or TradeFred (as the case may be) were "regulated" by ASIC, such that the customer was exposed to less risk that would otherwise be the case;
22. Revenue Representations: [921] a category of statements that were alleged to constitute false or misleading representations or to amount to misleading or deceptive conduct, comprising representations to the effect that: (i) USG would not make a market for any CFD or Market FX Contract positions opened by the customer; (ii) EuropeFX (or TradeFred as the case may be) would generate revenue when the customer made money; (iii) EuropeFX or TradeFred would generate revenue based solely on commissions or fees which applied when a customer opened a CFD or Margin FX Contract position (such as spread or commission) and/or when a customer kept open a CFD or Margin FX Contract position (swap charges); (iv) EuropeFX or TradeFred would not make money when a customer lost money; or (v) the account managers would earn commission based solely on commissions or fees which applied when a customer opened a CFD or Margin FX Contract position (such as spread or commission) and/or when a customer kept open a CFD or Margin FX Contract position (swap charges);
23. Rob Clayton Reports: [1181] the alleged reports which were the subject of the Rob Clayton Report Representations and the Rob Clayton Representations;
24. Rob Clayton Report Representations: [1179], [1181] a category of statements that were alleged to constitute false or misleading representations or to amount to misleading or deceptive conduct, comprising statements to the effect that an analyst engaged by USG named Rob Clayton prepared reports (the Rob Clayton Reports) which would be emailed to the customer and: (i) would provide the customer with advice regarding opening particular positions, including details such as when to buy or sell particular assets, or details such as the stop loss or take profit which should be used on particular positions; and/or (ii) would result in an accuracy or success rate of 80% or greater if followed; and/or (iii) were circulated to the major Australian banks;
25. Rob Clayton Representations: [1179], [1182] a category of statements that were alleged to constitute false or misleading representations or to amount to misleading or deceptive conduct, comprising statements to the effect that an analyst engaged by USG named Rob Clayton was: (i) in his previous role at Westpac, the head, or the head technical analyst, of Westpac and/or responsible for advising or directing Westpac as to what the bank should trade; and/or (ii) paid by USG millions of dollars a year to write the Rob Clayton Reports;
26. Signal Provider Statements: [814] a category of the alleged personal advice statements, comprising statements to the effect that customers should open, close or leave open CFD or Margin FX Contract positions in accordance with indicators on third-party websites;
27. SOC: [103] the Statement of Claim filed by ASIC on 12 April 2021;
28. Trading Strategy Statements: [820] a category of the alleged personal advice statements, comprising statements to the effect that customers should adopt a trading strategy as advised by the account manager in relation to CFD or Margin FX Contracts;
29. USG Profit Representations: [1179], [1180] a category of statements that were alleged to constitute false or misleading representations or to amount to misleading or deceptive conduct, comprising representations to the effect that customers trading CFDs or Margin FX Contracts: (i) would make a profit, either by reference to a specific figure or percentage return on investment; or generally (ii) would earn "income" of $100 to $200 per week; or (iii) would be able to close 90% or more of their trades in a profitable position;
30. Withdrawal Representations: [930] a category of statements that were alleged to constitute false or misleading representations or to amount to misleading or deceptive conduct, comprising representations to the effect that customers would be able to withdraw money deposited into their trading accounts: (i) in the same manner as money held in a bank account, i.e. an account with an Australian deposit-taking institution; or (ii) within a particular period of time as specified by the account manager, including immediately or at any time;