The settlement agreement follows allegations that the two companies violated Ontario securities law by engaging in unregistered trading of CFDs, and by issuing and distributing these products to Ontario investors without a prospectus. CFD issuers such as VGP and VIG must comply with the registration and prospectus requirements in the Securities Act (Ontario) or rely on exemptions from those requirements.

It is imperative that foreign market participants, including online trading platforms, identify and comply with local securities laws. VGP and VIG were foreign-based firms that operated unregistered online trading platforms under the name “Vantage FX” and allowed Ontario residents to trade CFDs. In response to a notice from its licensor, the Australian Securities & Investments Commission, about the legality of its overseas offerings, VGP ceased its Ontario operations, but gave Ontario investors the option to be transferred to its Cayman affiliate, VIG. The Ontario investors that did not close their accounts continued to trade CFDs on VIG’s “Vantage FX” online trading platform.

“Regardless of the location of their home base, offshore platforms offering services to Ontarians are subject to Ontario’s securities laws,” said Jeff Kehoe, Director of Enforcement at the OSC. “We will take corrective action against firms that try to ‘jurisdiction shop’ and fail to comply with our laws. These companies cannot avoid their regulatory obligations by relocating their operations.”

As part of the settlement agreement, VGP and VIG have agreed to pay an administrative penalty of CAD 600,000 and to disgorge USD 3 million. The companies have also agreed to pay a further CAD 10,000 towards the cost of the OSC’s investigation.

Additionally, both companies implemented significant internal controls and procedures to prevent Ontario residents from opening accounts.

The mandate of the OSC is to provide protection to investors from unfair, improper or fraudulent practices, to foster fair, efficient and competitive capital markets and confidence in the capital markets, to foster capital formation, and to contribute to the stability of the financial system and the reduction of systemic risk. Investors are urged to check the registration of any persons or companies offering an investment opportunity and to review the OSC investor materials available at http://www.osc.ca.