Oz Crackdown on Finance Cowboys
2019 kicked off with welcome headlines about a crackdown on the Australian finance industry. Well, not exactly a crackdown. Just the introduction of new education requirements and a revamped code of ethics.
This quote from 62-year-old financial adviser Alan Jarrot in a Sydney Morning Herald report sums it up perfectly:
“Cowboys will find a way around the rules anyway and often it’s the most educated who break the rules. So they’re punishing the majority to try and catch the minority.”
The changes are tipped to wipe out nearly a third of Australia’s financial planners, many of whom have invaluable industry experience and ethical track records.
While tertiary qualifications are worth something, nothing beats on the job experience that often teaches you things that you will never find in a university curriculum.
Imagine how progressive Australian politics would become if we replaced self-serving, institutionalised career politicians with ‘real world’ men and women with diverse work and life experience?
Oz Scammers Still Sitting Pretty
Jarrot’s comment naturally reminded me of minority cowboys like financial planner David Orth, his elusive ATP & Audrn mates (and the rest), all sitting pretty in their luxury homes after scamming millions from unsuspecting investors. And getting away with it.
To be fair, ASIC has banned Orth from the finance game for five years and slapped him with a $400,000 fine. Chicken feed. And he gets to keep all of his ill-gotten gains.
Since writing about my experiences, I have been contacted by various people who have shed welcome light onto the shady Orth empire. (Read the stories here.)
In late 2018, I received further information from a successful trader and finance educator Jake Schroeder.* He confirmed my long-held suspicions that Real Wealth and The ATP were devout bed-buddies at the time of my ensnarement.
Jake crossed paths with David Orth at Forex and perceived him as a ‘good’ trader. The kind of trader prospective clients wish for but are hard to find. Unfortunately, Jake was burnt by brokerage group GTL Tradeup which folded in September 2013 after the owner Mian Mehmood ran off with all the money. An all too common scenario in Australia.
How do ‘Good’ Trader’s Turn Bad?
Following the GTL collapse, Jake collaborated with both David Orth and Jade Capital to get a new license, only to discover both parties were ‘a lot of trouble.’ He also knew the original owner of Real Wealth, who lived to regret selling his financial planning business to Orth – not to mention handing over his client base.
In Jake Shroeder’s words:
“The $400k fine would be a snip to Orth. There are many other stories around him, but he is definitely a crook who will scam everyone out of money where he can. The guys at ATP wanted me to trade for them, as their robots were losing money, but I just ran a mile. David was the licensee.
How it all started was David was a trader for Hometrader, a listed company (that eventually went bust). He was a very good trader and moved from that into Forex trading. I’m not sure why he ever moved into being a scammer, because he was a good trader when I knew him. But for whatever reason, he ran auto-robots on Forex, which made incredible money for the first 6 months and then blew up.
He knew it was happening, but used to keep selling it anyway. You see, in forex trading, you can make millions in spread rebates from the broker; so if you have a massive account (using other people’s money) you can make a pile whether the robot makes money or not. You just make a pile on rebates.
Orth and his brother made a small fortune just on rebates -the more frequently you trade, the more you make, but that is extremely high risk. From there, the schemes became even more elaborate once he owned an Australian Financial Service Licence (AFSL). He made money licensing that out to other (dodgy) institutional traders who fleeced people, by charging them licensing fees. The ATP was one such company, but there were dozens of others.”
In the US It’s Fraud – In Oz It’s OK?
Jake also revealed that Orth owned a company called Teach Me To Trade, licensed through his own AFSL company. He fleeced millions from unsuspecting customers and asked Jake to trade when his autobots lost loads of money. When Jake listened in to a webinar and heard Orth promise clients 100% return in 6 months, it left him bewildered.
“Having grown up as a trader in London, if we achieved over 20% in a year, we’d be over the moon.”
Interesting to learn that self-proclaimed expert investors of an American based Teach Me To Trade company were indicted on federal fraud charges in 2008. Here in Australia, fraudsters seem to move freely from one scam to the next. If they’re really unlucky, ASIC will slap them with a ban and chicken feed fine.
Needless to say, Jake has long since parted company with Orth. His parting words summed up the sorry state of white-collar crime in Australia:
“For every David Orth, there is another around the corner.”
And the Government’s well-meaning new education requirements and code of ethics won’t stop them.
Hark The Archangel of Finance?
On a lighter note, it turns out that David Orth is a Mormon. Yes! A Mormon.
As he sits out his ASIC ban, smugly guarding his flock of Gold Coast investment properties, perhaps he could fast-talk his way into the hit Broadway musical The Book of Mormon – as the Archangel of Finance.
The Great Redeemer?
The Boy Who Cried Wolf of Wall Street?
With Compliments, Linda Summer, Scribe @ Lost For Words
*Real name not used