ASIC caps off big week
TheAustralian Securities and Investments Commission(ASIC) has capped off a busy week after requesting an investment advisory group to notify clients regarding incorrect past performance figures, seeking greater levels of disclosure in a capital raising in accountancy groups and receiving an enforceable undertaking limiting the sale of share trading software.
In the latter action ASIC received the enforceable undertaking from licensed securities dealer, Mortgage and General Financial Services Pty Ltd in which the group says it will not sell or supply its share and options trading computer software, Ignition, which provides advice on whether to buy, sell or hold shares and options.
ASIC says that in selling Ignition, and providing training and educational services about the use of the software the group contravened its licence restrictions which is restricted to providing advice about prescribed interests (managed investments), bank securities and government securities.
ASIC has also extended the exposure period for the offer information statement (OIS) of the Success Financial Group, a public company based in Perth, which invests in small accounting practices.
The statement sought to raise $1,020,000 through ordinary shares and options to make investments in accounting practices but had no minimum subscription and was not underwritten.
As a result of a meeting ASIC extended the exposure period of the OIS to 14 days, which ended on October 8, 2002, due to concerns about insufficient disclosure regarding the use of funds to be raised and how the funds would be applied if the offer was not fully subscribed.
In seeking to address the issue of the use of past performance figures the regulator accepted an enforceable undertaking from Fat Prophets, an investment advisory group, to write to current and past subscribers to its online stockmarket newsletter in which it referred to 'average return' on successful recommendations.
The reason for ASIC seeking the enforceable undertaking was that using only successful recommendations in calculating an average rate of return did not give a true or fair picture of real average returns.
Fat Prophets will publish a notice addressing ASIC's concerns in its next newsletter and send a copy of the notice to past subscribers as well as invite complaints from subscribers referring any unresolved complaints to the Financial Industry Complaints Service. It will also be using a third party expert to create a system which would accurately record Fat Prophets results in the future.
The three actions in the latter half of last week come on the back of two separate moves against advisers which resulted in two receiving jail terms and another being subject to an enforceable undertaking.
The two advisers, based in Melbourne and associated with the failed Lifestyle property group were sentenced to a combined total of seven years jail after pleading guilty to charges brought by ASIC.
Another former proper authority holder accepted an enforceable undertaking from the regulator not to apply to ASIC for an Australian Financial Services Licence or become a representative of such a licence holder for two years after making applications for Telstra 2 Instalment Receipts using names that may have been contrived between August and October 1999.
AUTHOR
Jason Spits
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