Business Editor for the NZ Herald

FMA tells foreign exchange company to change website

Cambrian Corporation, a foreign exchange educator, has been told by the Financial Markets Authority to change its website and marketing materials. Photo / David White
Cambrian Corporation, a foreign exchange educator, has been told by the Financial Markets Authority to change its website and marketing materials. Photo / David White

New Zealand's market watchdog has ordered a foreign exchange educator to change its marketing that it says was misleading or deceptive.

The director of the company, Jade Lynn, does not agree with all of the FMA's findings (read a full statement below).

Auckland-based Cambrian Corporation, according to its website, offers an education system teaching customers "how to navigate trading platforms and the foreign exchange markets".

The Financial Markets Authority says, in its view, Cambrian breached two provisions of the Financial Markets Conduct Act.

In response, the regulator has ordered the company to change its marketing materials and website.

Cambrian must also provide a copy of the FMA's order to all of its present or former clients.

"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," FMA director of regulation Liam Mason said.

"Clients who signed up to Cambrian's services will also have the opportunity to consider whether they did so on the basis of misleading information and seek recovery of any losses on that basis," Mason said.

The order sent to Lynn, as Cambrian's director, says the company must ensure its marketing clearly conveys that trading foreign exchange cannot be relied upon to provide substantial profits quickly and consistently and that such trading is high risk.

The order sent to Cambrian alleges the company published "misleading and deceptive marketing material" about foreign exchange trading that contained "unsubstantiated representations".

While the FMA says Cambrian had agreed to correct its marketing earlier this year, the regulator believes the company's current material continues to "provide a dominant market message that forex trading provides an easy way to profit from financial markets".

This is not sufficiently balanced by information about the risks of the foreign exchange and the effort required for a trader to actively manage their positions.

"This is not sufficiently balanced by information about the risks of the foreign exchange and the effort required for a trader to actively manage their positions," the order says.

Lynn, according to a High Court judgment from June last year, was formerly a sales consultant to foreign exchange software company PTT.

PTT later ran into its own problems with the FMA, which last August froze the company's assets.

The FMA acted because it had serious concerns that PTT was running a "fraudulent scheme designed to obtain money from members of the public", a judge said last September.

Lynn Statement:

Naturally I am disappointed by the decision and although I do not agree with all of their findings, in particular, their analysis of Cambrians trades and trading journal as well as the disregard of analyzing further months of trading as supplied to the FMA, I am happy to comply and meet the requirements and view of the FMA in how Cambrian presents its marketing materials to the public.

The analysis of Cambrians trades were performed by the FMA with Bloomberg - a different data source to the data source used by Cambrian and its clients and one must take into consideration that each trading platform has subtle variances due to the brokers spread and the data pricing. For this reason the platforms used by Cambrian and its clients lead to materially different results to the FMA's findings and screenshots of actual trading charts were presented to reveal this factually incorrect data. I was informed that this was not enough evidence to suggest their analysis is flawed.

Nonetheless I am happy to comply and alter Cambrian's marketing materials to fall inline with the FMA's view of the forex markets. I have expressed complete willingness and have complied with all aspects of the investigation process thus far and will continue to ensure Cambrians materials meet the regulations and requirements of the FMA.


See the full FMA direction order here:

- NZ Herald

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