ASX Wolf in sheep’s clothing: Federal Court grants injunctive relief for ASIC over unlicensed financial advice

21 June 2023
Guy Edgecombe, Partner, Brisbane

In late 2022, ASIC filed an application with the Federal Court, claiming that the Defendant, Mr Scholz, was conducting a financial services business by offering direct and indirect tips regarding the purchasing of shares in particular companies through Instagram stories, online seminars and Discord channels. The court decided that this activity constituted financial product advice, which requires a valid AFSL under section 911A of the Corporations Act 2001 (Cth) (Corporations Act).

Earlier this month, the Federal Court granted an injunction, which restrains Mr Scholz from hosting online groups for which a membership fee is charged, and in which messages are exchanged about share trades, without holding an AFSL.

Mr Scholz started off ‘Finfluencing’ by posting his trading opinions on Instagram stories (being posts viewable for only 24 hours). Often, this would include an indication that the acquisition of shares in a particular company would be a good investment. While he might have been aware that his stories on Instagram would be likely to influence others, he considered himself to be avoiding liability on the proviso that he was simply sharing his opinion, and that he was not charging the individuals directly. Of course, the acquisition of shares would ‘pump’ the share price to Mr Scholz’s benefit.

Within months, Mr Scholz was charging $500.00 for private tips to clients, conducting live Zoom sessions advising consumers how to trade on ASX, and created a Discord group where messages about trading were shared with members for an annual subscription fee of $1,000.00. Over the relevant period, Mr Scholz received approximately $1.1 million from these services.

Did Mr Scholz provide financial product advice?

Instagram stories

An interesting question for the Court was whether Instagram stories, which the Court conceded did not contain any overt recommendation, still amounted to financial product advice. Mr Scholz argued that because the Instagram stories were not a direct recommendation, and were posted for free, that they could not form part of a financial services business.

The Court considered Mr Scholz’s stories alongside the numerous ‘lifestyle posts’ which, among many, included Mr Scholz driving a Ferrari and popping champagne. From this, the Court concluded there was a clear intention for Mr Scholz to make himself out to be a successful share trader with the ability to identify worthwhile companies for a successful investment.

The Court found that Mr Scholz was recommending the acquisition of shares in certain companies, and noted that it was irrelevant whether the stories did not contain any overt recommendation to acquire the shares: it was enough that Mr Scholz referred to a company or its shares in a favourable way, which influenced viewers to make a decision in relation to a particular financial product. The Court found that this constitutes financial product advice for the purposes of section 766B(1) of the Corporations Act.


Mr Scholz also held seminars, both online and in person, where he taught attendees about how to trade on the ASX, at a cost of $500.00.

In Court, witnesses attested to the fact that Mr Scholz made explicit comments about buying into companies in the seminars, and these companies often mirrored those that he was posting about on Instagram. The Court held that this was sufficient to prove that Mr Scholz made recommendations about particular shares, which he predicted would improve in value, rather than providing practical examples for teaching purposes.

Black Wolf Pit Channel

Mr Scholz also set up the ‘Black Wolf Pit Channel’ on a social media platform called Discord, where Mr Scholz provided recommendations and advice in group and one-to-one communications. While this channel was not able to be accessed by the public in the same was as the Instagram activity, the channel gave recommendations and advice to participants as to whether they should buy, sell or sit on shareholdings.

The Court held that the statements made on the channel constituted financial product advice within the meaning of section 766B(1) of the Corporations Act.

Was Mr Scholz conducting a financial services business?

The question of whether Mr Scholz carried on a financial services business was considered by the Court. It was determined that his activity as the ‘ASX Wolf’ on Instagram, his seminars and the ‘Black Wolf Pit Channel’ had features of a commercial enterprise, and constituted a business.

In arriving at a decision, the Court looked at his branding and logo as the ‘ASX Wolf’, his promotion of the business through staged seminars, the transactions with individuals, and that there was a clear profit-making purpose.

Crucially, the financial product advice given by Mr Scholz formed an integral part of the business, and the Court determined that he was carrying on a financial services business within the meaning of section 911A of the Corporations Act.

Key takeaways

On 13 April 2023, the Federal Court awarded ASIC injunctive relief against Mr Scholz, restraining him from hosting online groups for which a membership fee is charged, and in which messages are exchanged about share trades. He is also restrained from carrying on a financial services business in Australia, due to his contravention of section 911A of the Corporations Act, and was ordered to pay ASIC’s costs.

It is incumbent upon emerging ‘Finfluencers’ – those who discuss or promote financial products online – to be aware of the regulatory risk, and the potential liability when providing advice to vulnerable consumers without possessing the requisite qualifications or authorisation.

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Authored by:
Guy Edgecombe, Partner
Elizabeth MacGillivray, Solicitor

This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.

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