ASIC bans rogue traders
The Australian Securities and Investments Commission (ASIC) has swooped on former authorised representatives of a funds management and stockbroking group after learning that illegal trading strategies engineered by the duo resulted in client losses of more than $15 million.
Former Performance Plus Funds Management representative Neville Martin Dunne has been slapped with a five year ban, whilst ex-Ord Minnett options broker Giles Markey has been restricted for two years from providing financial services as a result of the regulator’s investigation.
The action follows ASIC’s investigation into an options trading strategy conducted by the pair between 1997 and March 2003.
ASIC found Dunne had conducted a financial advice business from 1997 to September 2001 without a licence.
Despite this, the regulator learned Dunne introduced his client base of approximately 98 clients to an options trading strategy, and in total over 130 options trading accounts were established with Ord Minnett.
The regulator found Dunne did not obtain background financial and other information from his clients before recommending that they pursue the options trading strategy and made statements to prospective clients without caring whether they were true or not, deceiving inexperienced clients as to the nature and consequences of options trading.
Meanwhile Markey, effecting the transactions on behalf of Dunnes clients was found guilty executing what was found to be an often inappropriate, aggressive trading strategies that were inconsistent with the financial profiles of the clients.
ASIC also slammed Markey for becoming personally financially involved in the clients’ financial arrangements with Ord Minnett.
The strategy implemented by the pair involved selling put options below market value in a given month.
The put options were written over the shares from among the fifty largest companies by market capitalisation listed on the Australian Stock Exchange, with an emphasis on shares from among the 20 largest listed companies.
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