Financial services' bad apples
A small number of bad apples in the financial services industry once again managed to attract significant attention in 2012.
The past year has seen a number of bad apples emerge into the spotlight.
The most significant event on this front seems to be the cancellation of Morrison Carr’s license and the banning of its sole director – Denis Cardakaris.
ASIC found Cardakaris transferred the business from his old licence (Morisson Carr Australia) – to the new license (Morisson Carr Financial Services), affecting the ability of clients to pursue their claims.
In addition to that, Cardakaris lied to the company’s professional insurer and was deemed “not of good fame” by ASIC Commissioner Peter Kell.
Another failure which made nation-wide news was that of Victorian debenture issuer Banksia, which collapsed in October owing around $660 million to retail investors, many of whom are over 55 years of age.
Being a debenture issuer, Banksia was not regulated by the Australian Prudential Regulation Authority, which could potentially leave many investors without full compensation.
And then there was Standard & Poor’s (S&P), which gave a “AAA” rating to a failed product called Rembrandt Notes.
The researcher was ordered by the Federal Court to pay a third of the $16 million in damages incurred by retail investors from Bathurst Regional Council – the other two thirds to be paid by ABN Amro and Local Government Financial Services (LGFS).
However, the court also ordered both S&P and ABN Amro to pay around $8 million each to LGFS for losses incurred when it sold a cache of Rembrandt notes to its parent company upon the downgrading of the notes by S&P.
There were also quite a few rogue financial advisers who received either temporary or permanent bans from the industry:
- Former Commonwealth Financial Planning advisers – Andrew Awkar, Jane Duncan and Joe Chan received permanent, three-year and two-year bans respectively, bringing the number of banned CommFP advisers to six.
- Former WealthSure authorised representative Janeece Giraldo received a five-year ban from the financial services industry, mostly for engaging in misleading and deceptive conduct.
- Former PIS adviser received a three-year ban for unjustifiably placing clients in geared products.
- Former Storm Financial and current AAA Financial Intelligence adviser, Walter Fullerton-Smith, received a life ban by ASIC due to unprofessional conduct during his days at Storm.
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