CommSec fingered in fake trading action
Commonwealth Securities (CommSec) has been forced to pay $50,000 to the Australian Securities and Investments Commission (ASIC) as penalty for its involvement in a misleading appearance of trading action.
The penalty was imposed by the Market Disciplinary Panel (MDP), which found CommSec interfered with the efficiency and integrity of the ASX market by not providing adequate filtering to prevent 48 crossings.
The crossings were acted on by a client and designed to mislead investors regarding the trading action of Oaks Hotels and Resorts Ltd.
CommSec, via its client, placed 96 orders for the Oaks Hotel shares - 48 in the client's name and 48 in the client's wife's name, which had no beneficial change of ownership.
ASIC said the crossings represented 11.88 per cent volume in the shares and created the appearance of active trading.
The MDP found that CommSec did have a system in place to identify and prevent No Change of Beneficial Ownership (NCBO) orders from the same account entering the market, but did not review NCBO transactions from accounts that were connected.
However, three of the 48 crossings were sprung by unrelated filters and subsequently approved by CommSec designated trading representatives (DTRs).
CommSec did not refute the MDP's charges, which found it had breached market integrity rule 5.5.2 of the ASIC Market Integrity Rules (ASX Market) 2010 (MIR 5.5.2) and centred around the actions of the company on behalf of its client between 4 August 2010 and 20 January 2011.
Although the company closed the client's account in February 2011 and reported the matter to another regulator, it did not alert ASIC.
CommSec has been reprimanded in the past, receiving one relevant action for breaking market integrity rules and several sanctions from the ASX Disciplinary Tribunal since 2002.
Recommended for you
Proper recordkeeping has been described as the “mortar between the bricks” of the advice process and critical to an FSCP decision as an adviser is suspended for failures in this area.
There could be changes ahead for how ASIC requires licensees to handle conflicts of interest as the corporate regulator announces it will be meeting key stakeholders next year to update guidance.
As investors increasingly seek to embed ESG considerations in their portfolios, a specialist adviser has offered tips for financial planners who may feel overwhelmed in tackling these complex topics with clients.
Global investment consultancy bfinance is expanding into offering services for wealth managers as they seek advanced investment strategies for their clients.
