ASIC cites planner actions as vindication of its effectiveness

The Australian Securities and Investments Commission (ASIC) has sought to use its actions against financial planners to defend decisions it made with respect to acting against companies associated with the Reserve Bank, Securency International Pty Ltd and Note Printing Australia Limited. 

In an official statement issued ahead of an ABC Four Corners program broadcast dealing with the Iraq scandal, the regulator said its decision not to proceed against officers of the two companies had been based on a  thorough assessment of the operations and that, nonetheless, the public could be “utterly confident in ASIC’s actions”. 

It then went on to outline why the public and the Government could have faith in its actions by outlining a number of its actions, most of which referred to adviser-related matters including the collapse of Trio Capital, the enforceable undertakings imposed on Macquarie Equities, compensation obtained for victims of Storm Financial, the banning of Commonwealth Financial Planning Limited advisers and a subsequent enforceable undertaking. 

ASIC said this all served to demonstrate its solid record with respect to enforcement. 

The following represents the outcomes cited by ASIC: 

• ASIC’s willingness to investigate and enforce company officers’ breaches of the Corporations Act, arising from allegations of overseas corruption, has been demonstrated by its issuing of six civil proceedings in the Australian Wheat Board matter. The first two to be concluded have resulted in fines and bannings. 

• After the collapse of Trio Capital, ASIC’s investigation led to 11 people being jailed, banned, disqualified or removed from the industry for more than 50 years. 

• Earlier this year ASIC accepted an enforceable undertaking from Macquarie Equities following a surveillance that found deficiencies in its supervision of advisers. Macquarie was instructed to rectify the problems and create a culture where compliance was central to advice, not an afterthought. 

• Earlier this year, a so-called “mastermind” behind a dozen unregistered offshore managed investment funds was permanently banned and fined $500,000 - the largest fine in ASIC’s history. Three advisers linked with this scheme are now in jail. 

• ASIC’s actions against widespread problems at Commonwealth Financial Planning Limited (CFPL) resulted in: 

- seven advisers banned; 

- a comprehensive compensation program that has seen more than 1,100 investors receive $50 million to date; and 

- CFPL entered into a court enforceable undertaking that required it to reform completely the way it does business and deals with clients. 

The Bank of Queensland, Senrac Pty Limited and Macquarie Bank Limited paid more than $1 million to former Storm investors Barry and Deanna Doyle for their financial loss. 

• This year ASIC achieved eight convictions for insider trading, including three people sent to jail. 

• A former director of Dollarforce Financial Services Pty Ltd was jailed for four years over his role in the collapse of the property development group.  

A Parliamentary Committee will later this year begin hearings around the performance of ASIC and is expected to traverse a number of the issues arising from its decision not to pursue executives within the Reserve Bank-related companies.