ASIC grants reprieve to Chapel Road
Securities dealer Chapel Road has resumed operations following the Australian Securities and Investments Commission’s (ASIC) agreement to a conditional stay of its dealers licence.
Chapel Road made headlines earlier this month when ASIC revoked its licence due to a breach of conditions and became the first group in three years to be hit with a licence revoke by ASIC.
ASIC found Chapel Road had failed to have an adequate compliance system in place and also failed to obtain the technical knowledge necessary to perform its responsibilities.
Chapel Road was found to have not provided adequate initial and ongoing training to its proper authority holders (PAH), or adequate supervision of them.
The conditional stay of the revoked dealers licence has been granted pending a review by the Administrative Appeals Tribunal (AAT). According to Chapel Road chairman Jim Gellett the review is still expected to take up to three to four months, however ASIC has requested the AAT expedite the hearing.
Conditions for the stay reached by negotiations between ASIC and Chapel Road involve the dealer group having to advise prospective clients, other clients and proper authority holders of the revocation proceedings and the stay, in writing.
Chapel Road must also provide the industry watchdog with a current client list and contact details of any new clients, as well as an approved product list. During the stay period Chapel Road must also not engage any new staff or representatives.
At the time of the licence revocation, ASIC NSW director of Deposit-taking, Insurance, Superannuation and Consumer division Lucienne Layton said the action was not common place in the past as there is usually more of a focus on the PAHs.
"This is not something that has been done frequently up to this point. There has been more of an emphasis on the proper authority holders," she says.
Layton says ASIC commenced investigations into the group about April last year after the January 2000 ban of Steven Michael Cochrane, then a Chapel Road PAH.
Cochrane was banned for life from acting as a representative of a securities dealer or investment adviser, after ASIC found he had not performed the duties of a dealer representative efficiently, honestly and fairly.
"If a proper authority holder is behaving improperly it is an indication that there are systemic issues, and we [ASIC] will then take a look at the dealer group," Layton says.
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