Australian Securities and Investments Commission v eToro AUS Capital Limited
[2025] FCA 100
•20 February 2025
FEDERAL COURT OF AUSTRALIA
Australian Securities and Investments Commission v eToro AUS Capital Limited [2025] FCA 100
File number(s): NSD 805 of 2023 Judgment of: STELLIOS J Date of judgment: 20 February 2025 Catchwords: PRACTICE AND PROCEDURE – application for final suppression and non-publication order under s 37AF of the Federal Court of Australia Act 1976 (Cth) – where interim orders made for suppression and non-publication – where commercially sensitive information not available in the public domain – whether order necessary to prevent prejudice to the proper administration of justice – whether duration of order reasonably necessary Legislation: Federal Court of Australia Act 1976 (Cth) ss 37AE, 37AF, 37AG(1)(a), 37AJ Cases cited: Australian Competition and Consumer Commission v Air New Zealand Limited (No 3) [2012] FCA 1430
Australian Competition and Consumer Commission v Cascade Coal Pty Ltd (No 1) [2015] FCA 607; (2015) 331 ALR 68
Australian Competition and Consumer Commission v Cement Australia Pty Ltd (No 2) [2010] FCA 1082
Australian Competition and Consumer Commission v Origin Energy Electricity Ltd [2015] FCA 278
Australian Competition and Consumer Commission v Oscar Whylee Pty Ltd (No 2) [2020] FCA 1361
Australian Competition and Consumer Commission v Valve Corporation (No 5) [2016] FCA 741
Chen v Migration Agents Registration Authority (No 1) [2016] FCA 649
Chief Executive Officer of the Australian Transaction Reports and Analysis Centre v TAB Ltd(No 4) [2017] FCA 1532
Clark v Digital Wallet Pty Ltd [2020] FCA 877
Computer Interchange Pty Ltd v Microsoft Corp [1999] FCA 198; (1999) 88 FCR 438
Hogan v Australian Crime Commission [2010] HCA 21; (2010) 240 CLR 651
In-N-Out Burgers, Inc v Hashtag Burgers Pty Ltd [2020] FCA 193; 377 ALR 166
Kilgour v Commissioner of Taxation [2022] FCA 1487
Motorola Solutions, Inc. v Hytera Communications Corporation Ltd (No 2) [2018] FCA 17
Ogawa (formerly Ms PD) v President of the Australian Human Rights Commission (Pseudonym) [2022] FCAFC 160; (2022) 294 FCR 221
Steelforce Trading Pty Ltd v Parliamentary Secretary to the Minister for Industry, Innovation and Science (No 2) [2018] FCAFC 47
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Number of paragraphs: 43 Date of last submission/s: 17 February 2025 Date of hearing: Determined on the papers Solicitor for the Plaintiff: Australian Securities and Investments Commission Counsel for the Defendant: P Herzfeld SC, F Tao and T Maybury Solicitor for the Defendant: Piper Alderman
ORDERS
NSD 805 of 2023 BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Plaintiff
AND: ETORO AUS CAPITAL LIMITED ACN 612 791 803
Defendant
ORDER MADE BY:
STELLIOS J
DATE OF ORDER:
20 FEBRUARY 2025
THE COURT ORDERS THAT:
1.Pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) (Act) and on the grounds referred to in s 37AG(1)(a) of the Act, from the date of this order, the Confidential Information (as defined in Schedule “A” to these orders) not be published or disclosed to or by any person or entity and not be disclosed in the open part of any Court transcript, and be restricted to:
(a)the parties;
(b)the parties’ legal representatives;
(c)the independent expert witnesses for the parties;
(d)ASIC’s staff working in respect of this proceeding as notified in writing by the plaintiff to the defendant from time to time;
(e)the presiding judge; and
(f)necessary court staff.
2.Prior to the tender by any party of any original or copy of any document forming part of the Confidential Information, such documents be marked on each page with the words “Confidential Information for use in Court proceedings NSD 805 of 2023”.
3.Any original or copy of any document forming part of the Confidential Information that is admitted into evidence:
(a)be identified on any list of exhibits as such; and
(b)not be further copied or reproduced, by any means, including by electronic or photocopy means or handwritten summary thereof.
4.The transcript containing any Confidential Information be redacted by agreement of the parties within one business day of the transcript becoming available to the parties, with the scope of such redactions to be approved by the Court either on the next day that the Court sits in the hearing of these proceedings or otherwise via email between the parties and the presiding judge’s Associate.
5.Orders 1 to 4 shall operate until 4:00pm on 20 February 2028 or until further order.
6.The defendant has liberty to apply to the Court to extend the date referred to in order 5, provided that any such application is filed with the Court at least one month before the time expires.
SCHEDULE A
In these orders, “Confidential Information” means the following documents and all information contained within such documents:
(a)Paragraphs 21 – 42 inclusive of the Confidential Affidavit of Tracy Byrne affirmed 10 December 2024;
(b)Confidential Exhibit CT-1 to the affidavit of Clarence Tan Guan Hong affirmed 9 December 2024; and
(c)Annexure PG-1 to the Affidavit of Paul Green sworn 9 December 2024, (Mr Green’s Report) in respect of:
i.paragraphs 2.1.9, 3.2.18 – 3.2.28 inclusive, 7.2.27, 7.4.8, 7.4.22, 12.6.19, 12.6.21, 12.8.13, 12.8.32 - 12.8.34 inclusive, 12.8.40, and 13.2.12; and
ii.at Annexure 1 of Mr Green’s Report:
1.paragraphs 17 – 28 inclusive of Schedule A to the supplementary letter of instructions dated 29 November 2024; and
2.paragraph 2 of the further supplementary letter of instructions dated 8 December 2024.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
STELLIOS J
By interlocutory application filed 7 February 2025, the defendant in the principal proceeding, eToro AUS Capital Limited, seeks under s 37AF(1) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) a final suppression and non-publication order in relation to certain affidavit evidence that has been filed in the proceeding.
In the Originating Process in the principal proceeding, the plaintiff, the Australian Securities and Investments Commission (ASIC), seeks declarations of contravention of the Corporations Act 2001 (Cth), pecuniary penalty orders, injunctive relief and ancillary orders.
On 12 December 2024, Nicholas J made the following orders:
…
Interim confidentiality orders
28.Pursuant to s 37AI of the Federal Court of Australia Act 1976 (Cth) (FCA Act), until further order of the Court, the following information is to be kept confidential and not published or otherwise disclosed to any person other than the plaintiff (and staff of the plaintiff), the defendant, any legal representatives retained by the plaintiff and the defendant (including solicitors and barristers and any support staff of those solicitors and barristers), independent expert witnesses for the parties and the Court (and any Court staff or any other person assisting the Court), on the grounds that this order is necessary to prevent prejudice to the proper administration of justice under s 37AG(1)(a) of the FCA Act:
(a)paragraphs 21 – 40 inclusive of the Confidential Affidavit of Tracy Byrne affirmed 10 December 2024;
(b)Confidential Exhibit CT-1 to the affidavit of Clarence Tan Guan Hong affirmed 9 December 2024;
(c)Exhibit PG-1 to the Affidavit of Paul Green sworn 9 December 2024, in respect of:
i.Mr Green’s report paragraphs 2.1.9, 3.2.18 – 3.2.28 inclusive, 7.2.27, 7.4.8, 7.4.22, 12.6.19, 12.6.21, 12.8.13, 12.8.32 - 12.8.34 inclusive, 12.8.40, and 13.2.12; and
ii.Annexure 1 to Mr Green’s report paragraphs 17 – 28 inclusive of supplementary letter of instructions dated 29 November 2024 and paragraph 2 of further supplementary letter of instructions dated 8 December 2024; and
(d)transcripts recording the testimony of witnesses that discloses evidence relating to (a) to (c) above.
29. By 4.00 pm on 7 February 2025, the defendant file and serve:
(a)any interlocutory application for a final order pursuant to s 37AF of the FCA Act (Section 37AF Application), any affidavit evidence in support; and
(b) any outline of submissions in respect of the Section 37AF Application.
…
His Honour also noted that the s 37AF application would be dealt with on the papers, and that ASIC did not oppose the Court making a final order pursuant to s 37AF of the FCA Act in the nature of the interim confidentiality orders.
THE INTERLOCUTORY APPLICATION
Pursuant to s 37AF of the FCA Act, eToro now seeks a final suppression and non-publication order, along with ancillary orders to facilitate its implementation. The ground relied upon for the suppression and non-publication order under s 37AF(1), as set out in s 37AG(1)(a) of the FCA Act, is that “the order is necessary to prevent prejudice to the proper administration of justice”.
eToro sought orders in the following terms:
1.Pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) (Act) and on the grounds referred to in s 37AG(1)(a) of the Act, from the date of this order, access to and disclosure (by publication or otherwise) of the Confidential Information (as defined in Schedule A) not be published or disclosed to or by any person or entity and not be disclosed in the open part of any Court transcript, and be restricted to:
a.the parties;
b.the parties’ legal representatives;
c.the independent expert witnesses for the parties;
d.ASIC’s staff working in respect of this proceeding as notified in writing by the plaintiff to the defendant from time to time;
e.the presiding judge; and
f.necessary court staff.
2.Prior to the tender by any party of any original or copy of any document forming part of the Confidential Information, such documents be marked on each page with the words “Confidential Information for use in Court proceedings NSD805 of 2023”.
3.Any original or copy of any document forming part of the Confidential Information that is admitted into evidence:
a.be identified on any list of exhibits as such; and
b.not be further copied or reproduced, by any means, including by electronic or photocopy means or handwritten summary thereof.
4.The transcript containing any Confidential Information be redacted by agreement of the parties within one business day of the transcript becoming available to the parties, with the scope of such redactions to be approved by the Court either on the next day that the Court sits in the hearing of these proceedings or otherwise via email between the parties and the presiding judge’s Associate.
5.Orders 1 to 4 operate until such time as the Court discharges them, following an application by a person for discharge of the order or of the Court’s own motion, but only after providing the respondent an opportunity to be heard.
Schedule A to the interlocutory application defines Confidential Information to mean the following documents and all information contained within them:
(a)Paragraphs 21 – 42 inclusive of the Confidential Affidavit of Tracy Byrne affirmed 10 December 2024;
(b)Confidential Exhibit CT-1 to the affidavit of Clarence Tan Guan Hong affirmed 9 December 2024; and
(c)Annexure PG-1 to the Affidavit of Paul Green sworn 9 December 2024, (Mr Green’s Report) in respect of:
i.paragraphs 2.1.9, 3.2.18 – 3.2.28 inclusive, 7.2.27, 7.4.8, 7.4.22, 12.6.19, 12.6.21, 12.8.13, 12.8.32 - 12.8.34 inclusive, 12.8.40, and 13.2.12; and
ii. at Annexure 1 of Mr Green’s Report:
1.paragraphs 17 – 28 inclusive of Schedule A to the supplementary letter of instructions dated 29 November 2024 and;
2.paragraph 2 of the further supplementary letter of instructions dated 8 December 2024.
It can be seen that the content of Confidential Information identified in Schedule A largely aligns with the corresponding content of the interim orders made by Nicholas J. There is a slightly wider range of paragraphs proposed to be covered by the final orders in relation to the Confidential Affidavit of Tracy Byrne affirmed on 10 December 2024. However, that is of no consequence.
The application is supported by the affidavit, affirmed on 6 February 2025, of Debbie Kahal (Kahal Affidavit), the Chief Legal Officer at eToro Group Ltd (eToro Group). Ms Kahal deposes that the defendant is a wholly owned subsidiary of eToro Group.
ASIC has not sought to file any written submissions or affidavit evidence.
I sought clarification from the defendant on the wording of proposed order 1. It was agreed by the defendant that the words “...access to and disclosure (by publication or otherwise) of...” were superfluous and could be deleted. I also raised concern about the scope of proposed order 5 which sought to specify the duration of the orders. I will return to that matter later in these reasons.
As will be explained, on the evidence before the Court, and in the absence of opposition from the plaintiff, I am satisfied that, with the agreed amendment to the wording of proposed order 1, orders 1 – 4 should be made in the terms sought by the defendant. The orders will operate for a fixed three-year period subject to further application (orders 5 and 6).
APPLICABLE PRINCIPLES
The applicable principles governing the making of an order under s 37AF are “well settled”: Clark v Digital Wallet Pty Ltd [2020] FCA 877 at [19]. For present purposes, it is sufficient to note the following.
First, in considering whether such an order should be made, “the Court must take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice”: FCA Act, s 37AE.
Secondly, the threshold is necessity; mere desirability will not be sufficient: Chief Executive Officer of the Australian Transaction Reports and Analysis Centre v TAB Ltd(No 4) [2017] FCA 1532 at [9]; Motorola Solutions, Inc. v Hytera Communications Corporation Ltd (No 2) [2018] FCA 17 at [6]. Nor is it sufficient that there will be mere embarrassment, inconvenience, annoyance, or unreasonable or groundless fears: Australian Competition and Consumer Commission v Cascade Coal Pty Ltd (No 1) [2015] FCA 607; 331 ALR 68 at [30]; Chen v Migration Agents Registration Authority (No 1) [2016] FCA 649 at [11]. Consequently, the onus on the applicant is a “very heavy one”, and the threshold to be satisfied by the applicant is high: Australian Competition and Consumer Commission v Valve Corporation (No 5) [2016] FCA 741 at [8], quoting Computer Interchange Pty Ltd v Microsoft Corp [1999] FCA 198; 88 FCR 438, 442 [16]; see also Cascade Coal at [30].
Thirdly, it has been accepted “that commercial sensitivity can be an appropriate basis for making a suppression or non-publication order” by reason of s 37AG(1)(a): Motorola Solutions at [8]-[9], quoted in Steelforce Trading Pty Ltd v Parliamentary Secretary to the Minister for Industry, Innovation and Science (No 2) [2018] FCAFC 47 at [4] (Perram, Pagone and Bromwich JJ); see also Hogan v Australian Crime Commission [2010] HCA 21; 240 CLR 651 at [38]-[39]; Clark v Digital Wallet at [21]; Australian Competition and Consumer Commission v Air New Zealand Limited (No 3) [2012] FCA 1430 at [35]. In Motorola Solutions at [9], Perram J explained that the reasons for this are “generally associated with preserving the integrity of the litigious process, likely to be jeopardised if commercial competitors could benefit from court ordered production of trade secrets by parties to a suit”: quoted in Steelforce Trading at [4]. As Katzmann J said in Australian Competition and Consumer Commission v Origin Energy Electricity Ltd [2015] FCA 278, at [148] (ACCC v Origin Energy), “[i]t is in the interests of the proper administration of justice that the value of confidential information not be destroyed or diminished”: see also Kilgour v Commissioner of Taxation [2022] FCA 1487 at [29]; Australian Competition and Consumer Commission v Cement Australia Pty Ltd (No 2) [2010] FCA 1082 at [23] (ACCC v Cement Australia). Conversely, “[i]t is not in the interests of the administration of justice that proceedings ‘become a vehicle for advantaging or prejudicing trade rivals’”: ACCC v Origin Energy at [148], quoting ACCC v Cement Australia at [23]; see also In-N-Out Burgers, Inc v Hashtag Burgers Pty Ltd [2020] FCA 193; 377 ALR 166 at [373]; Australian Competition and Consumer Commission v Oscar Whylee Pty Ltd (No 2) [2020] FCA 1361 at [20].
Fourthly, not only must the circumstances justify an order by reason of s 37AG(1)(a), but the scope of the order must be confined to what is necessary to prevent prejudice to the proper administration of justice. As a Full Court said in Ogawa (formerly Ms PD) v President of the Australian Human Rights Commission (Pseudonym) [2022] FCAFC 160; 294 FCR 221 at [30] (Rares, Perry and Hespe JJ), “[i]f the Court decides that it is necessary in order to do justice in the proceeding to derogate from the principle of open justice, it must craft an order or procedure that limits the derogation only to the extent necessary to ensure that justice will be done”. Relatedly, s 37AJ(2) of the FCA Act provides that “[i]n deciding the period for which an order is to operate, the Court is to ensure that the order operates for no longer than is reasonably necessary to achieve the purpose for which it is made”.
SUBMISSIONS
In written submissions filed on 7 February 2025, eToro submits that the Confidential Information consists of detailed personal and financial data concerning its customers, and data concerning trades of contracts for difference (CFD) made by its customers. It is submitted that the Confidential Information is commercially sensitive and not available in the public domain.
eToro contends that the making of a final order under s 37AF(1), on the ground in s 37AG(1)(a), is justified for the following reasons.
First, the Confidential Information is valuable to eToro, which collects and stores the information, and uses it to conduct research and development on its products and services. It is contended that the outcomes of these activities inform eToro’s marketing operations and customer retention strategies, and that it invests significant amounts of money in these processes which it submits are crucial to maintaining its market competitiveness.
Secondly, the Confidential Information is valuable to eToro’s competitors because:
Access to the Confidential Information would provide competitors with an unfair advantage by offering a shortcut to understanding the behaviour of the Defendant’s customers, based upon which they could optimise their own customer acquisition and retention strategies without having to incur the same research and development and marketing costs that the Defendant has incurred…
Thirdly, disclosure of the Confidential Information would advantage eToro’s competitors and disadvantage it because:
Competitors could use the Confidential Information to replicate the Defendant’s most successful product offerings or target customers in the Defendant’s strongest demographics… Conversely, without reciprocal access to equivalent data held by its competitors, the Defendant would be unable to deploy counterstrategies against its competitors to offset its disadvantage. In this respect, public disclosure would diminish the value of the Confidential Information to the Defendant…
Fourthly, if there were disclosure, there is a real risk that the advantage received by eToro’s competitors, and the diminished value of the Confidential Information to eToro, would cause damage to its business. eToro further submitted that this damage would include loss of market share, reduced profitability, diminished investor confidence and, over time, a decline in eToro’s valuation and market position.
Fifthly, the orders are appropriately restricted in scope as they extend only to a discrete portion of eToro’s evidence in the proceedings, and the infringement on open justice is limited only to the extent necessary to ensure the proceedings do not inflict collateral damage on its business. By proposing a mechanism for lifting the orders in the future (see proposed order 5 of the interlocutory application), the orders will only operate for as long as is reasonably necessary to achieve the purpose for which they are made.
Finally, eToro intends to rely on the Confidential Information to make submissions to the Court with respect to the nature and characteristics of its CFD products. eToro submitted that:
These issues are central to the dispute between the parties. The Defendant ought not face the risk of incurring commercial harm as a price for mounting a defence to the Plaintiff’s allegations. This is especially so in the context of these being civil penalty proceedings in which the Defendant already stands at risk of exposure to potentially significant pecuniary penalties and/or orders that may have a substantial, restrictive impact on its business. Requiring the Defendant to face the additional risks posed by disclosure of the Confidential Information in the course of its defence would diminish public confidence in the administration of justice.
EVIDENCE
As indicated, the submissions are supported by the Kahal Affidavit.
Ms Kahal deposes that the Confidential Information contains two tranches of customer data which is prepared and extracted from eToro Group data servers. The first is described as Customer Information Data and the second is described as CFD Trading Data. Ms Kahal states that the Customer Information Data comprises detailed data on customer age, income amount and source of income; available liquid assets of the customer; customer responses to KYC (Know Your Customer) and screening tests; total and average amounts deposited with eToro; volume and frequency of CFD trades; realised and unrealised net profit and loss on real assets; realised and unrealised net profit and loss on CFDs and foreign exchange trades; and fees and commission charged by eToro on trades.
Ms Kahal also states that the CFD Trading Data contains detailed information on every individual CFD trade during the relevant period, including open, close dates of the trade and the duration; the underlying instrument of the trade; amounts invested to open the trade; profit or loss made at close of trade; fee and commission charged on the trade; and any leverage used on the trade.
These statements accord with the contents of the Confidential Information.
Ms Kahal deposes that the eToro Group has invested significantly in the research and development of its products, marketing and customer segmentation, and uses the findings to develop its customer acquisition and retention strategies. Ms Kahal also deposes that this investment in research and development allows the eToro Group to tailor its platform and offerings to specific user groups, and differentiate itself from its competitors.
Ms Kahal then seeks to explain the potential adverse consequences for eToro should the Confidential Information be made public.
First, she states that, if competitors had access to the Confidential Information, they could gather insights into the composition, financial performance and behaviour of customers and, thereby, be provided with an unfair and significant opportunity to optimise their own customer acquisition and retention strategies.
Secondly, Ms Kahal states that public disclosure may jeopardise the defendant’s relationships with its customers by compromising its ability to protect their privacy. While the data does not include the names and addresses of customers, instead identifying customers only by client number, she claims that allowing the Confidential Information into the public domain to any extent could undermine customer confidence in eToro’s ability to protect client data.
Thirdly, Ms Kahal claims that public disclosure would also weaken eToro’s ability to innovate with the dilution in the value of the publicly disclosed data.
Fourthly, she claims that public disclosure would lead to a loss of market share and reduced profitability and, over time, a decline in valuation and market position.
Fifthly, Ms Kahal contends that the replication by competitors of product features, marketing strategies and business operations could lead to declining customer loyalty and revenue loss, forcing engagement in defensive and prejudicial market strategies.
DISPOSITION OF INTERLOCUTORY APPLICATION
As indicated, ASIC does not oppose the Court making a final order in the nature of the orders sought by the defendant. ASIC has not sought to file any submissions to the Court on the interlocutory application, or to challenge the affidavit evidence.
I am satisfied that, on the evidence before me, the Confidential Information includes commercially sensitive information that is not available in the public domain. I accept eToro’s submissions that the commercially sensitive information is valuable to it and, if publicly disclosed, would be of value to its competitors. I also accept that public access to the Confidential Information would disadvantage eToro and provide its competitors with an unfair advantage. Its competitors would have the benefit of the defendant’s investment in research and development to develop its customer acquisition and retention strategies. I further accept that there is a real risk that eToro’s business, thereby, would be damaged.
I am satisfied that the proposed suppression and non-publication order is necessary to prevent prejudice to the proper administration of justice. eToro intends to rely on the Confidential Information to make submissions in this proceeding on issues central to the dispute between the parties. The intended use of that information to defend itself in this civil penalty proceeding should not come at the real risk of suffering a competitive disadvantage in its market, and consequent damage to its business. As the authorities set out above indicate, it is not in the interests of justice that proceedings become a vehicle for advantaging trade rivals.
I have taken into account that a primary objective of the administration of justice is to safeguard the public interest in open justice (FCA Act, s 37AE). However, I am satisfied that the scope of the Confidential Information is confined and tailored to what is necessary to prevent prejudice to the proper administration of justice. I am therefore satisfied that the ground in s 37AG(1)(a) has been established on the evidence before the Court, and that proposed orders 1 – 4 should be made pursuant to s 37AF of the FCA Act, subject to the minor amendment to the wording of proposed order 1 indicated above.
I had more difficulty with the duration of the order in proposed order 5. eToro proposed that the order be discharged upon the application of a person or the Court’s own motion. The proposed order did not identify a fixed or ascertainable period of time. While s 37AJ(3) of the FCA Act contemplates that the period of operation may be specified by reference to the occurrence of a specified future event, proposed order 5 appeared to me to be too open-ended to satisfy the requirement that the suppression and non-publication order operate for no longer than is reasonably necessary to achieve the purpose for which the order is to be made. That is particularly the case once the primary objective in s 37AE is taken into account, and also in view of the high threshold to be satisfied.
I sought further submissions from the defendant as to why the duration of the order should not be fixed at three years subject to further application. In response, the defendant consented to orders being made in those terms.
I am satisfied that a duration of three years, with liberty to apply for an extension of that period, is no longer than reasonably necessary to achieve the purpose for which orders 1 – 4 are to be made and, accordingly, I make orders 5 and 6 in those terms.
I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stellios. Associate:
Dated: 20 February 2025
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