A busy Q1 for ASIC advice action
As the first quarter of 2024 comes to a close, Money Management looks back on the corporate regulator’s actions in the financial advice sector.
The first quarter of the year kept ASIC busy with several Australian financial services licence (AFSL) cancellations, a Perth adviser being banned over fraud conviction alongside a court-enforceable undertaking.
January
Sydney advice firm sees ASIC’s first 2024 licence cancellation
In January, ASIC made its first AFSL cancellation of a Sydney-based financial advice firm called Indie Advice in Newtown. This was because the regulator became aware that the firm had “not been providing financial services for some time” despite being authorised to provide financial advice to retail and wholesale clients.
Former Melbourne director faces prison for allegedly breaching 10-year ban
Later that month, ASIC filed a contempt of court application against a Melbourne director for allegedly carrying on five financial services businesses despite being banned for 10 years. Joshua David Fuoco is alleged to have been involved in five companies, including three providing advice, between March 2019 and April 2023 in contravention of his 2018 ban.
February
ASIC bans adviser following fraud conviction
The first action in February was the permanent banning of Perth financial adviser Mark Raymond Sebo following fraud convictions. In September, the Perth financial adviser was sentenced to five years in prison after being found guilty of embezzling over $1 million from his clients’ self-managed super funds (SMSFs).
On the basis of these convictions, Sebo has been banned permanently from providing any financial services; performing any function involved in the carrying on of a financial services business; controlling an entity that carries on a financial services business; and engaging in any credit activities from 5 February 2024.
Former Melbourne adviser sees court-enforceable undertaking
ASIC accepted a court-enforceable undertaking from former Melbourne financial adviser, Shivdeep Jaidka, regarding advice on SMSFs.
Under the terms of the undertaking, Jaidka agreed that, for five years, he will not:
- Carry on a financial services business.
- Provide financial services.
- Act in a managerial capacity of any entity operating a financial services business or providing legal, accounting or other advisory services to a financial services business.
NextGen sees AFSL cancelled by ASIC
Advice licensee NextGen Financial Group saw its AFSL cancelled in February after the firm was wound up for insolvency. The firm formally entered into liquidation in November 2023 after losing a Federal Court case regarding an unpaid determination by the Australian Financial Complaints Authority (AFCA).
The case first began when the firm was ordered by the Federal Court in July 2023 to pay an SMSF trustee $270,000 over the determination regarding inappropriate financial advice. In September, the plaintiff in the case, WJ & V Drakoulis Super Pty Ltd, applied for NextGen to be wound up and a hearing was held on 3 October.
March
Troubled investment firm sees AFSL cancelled
Troubled investment firm Endeavour saw its AFSL cancelled because the firm is in liquidation and being wound up.
In January 2024, four directors of Endeavour Securities and Linchpin Capital Group were ordered to pay $390,000 by the Federal Court for multiple failings on a registered managed investment scheme. Ian Williams, Paul Raftery, Paul Nielsen and Peter Daly were found in April 2023 to have breached their duties as officers of a responsible entity of a registered managed investment scheme and did not act in the best interests of members.
Qld adviser receives permanent ban over dishonest conduct
A Queensland financial adviser Shane Rose was banned by ASIC from providing any financial services, performing any function involved in the carrying on of a financial services business, and from controlling an entity that carries on a financial services business.
ASIC found that Rose engaged in a conduct that was dishonest by using the client invested funds for purposes other than which they were given. The regulator also found that Rose is not a fit and proper person to participate in the financial services industry because his dishonest actions showed serious incompetence and irresponsibility, and that he is likely to contravene financial services law in the future.
ASIC cancels Sydney advice firm's AFSL
Closing out the month, ASIC cancelled the AFSL of Sydney advice firm Crown Wealth as the firm has gone into voluntary administration. According to Wealth Data, Crown Wealth lost more than 30 advisers since the start of the year including 22 advisers in the week to 16 February.
The firm was authorised from 28 March 2017 to provide advice to retail and wholesale clients about products including superannuation, securities, deposit and payment products, interests in managed investment schemes and life products, and to deal in those products.
AUTHOR
Jasmine Siljic
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