The Australian Securities and Investments Commission (ASIC) has had a win against the Administrative Appeals Tribunal (AAT) with the Federal Court setting aside a tribunal decision not to uphold an ASIC ban against a former National Australia Bank financial planner who passed himself off as a client to obtain information from a superannuation fund.
The former planner found himself in hot water with ASIC even though he admitted his actions to his employer and tried to make good the losses suffered by an unwitting member of Maritime Super.
The Federal Court agreed with counsel for ASIC that the AAT, in not upholding the banning of the planner, Gerard McCormack, had misunderstood one of the concepts relevant to the imposition of a banning order – namely the concept of maintaining the public interest or confidence in the financial services industry.
The court agreed that the AAT should not have lifted the banning order just because it believed no person had suffered any financial detriment as a result of the actions of the financial planner.
It also agreed that the AAT had misunderstood or failed to have regard to the concept of general deterrence and found that it had misunderstood the meaning of dishonesty by finding that fraud is distinguishable from dishonesty.
The problems for McCormack arose when he began acting for a client named “Wright” who had moved from another NAB financial planner who happened to have another client of similar age, also named “Wright”.
The court was told that McCormack had then passed himself off as being the second Mr Wright to obtain details of moneys transferred from an MLC MasterKey account to Maritime Super and that he later, believing the money had been siphoned from his client by the previous planner, withdrew money from the Maritime Super account.
The court was told that McCormack confronted the previous planner on the issue and was told that two clients existed named “John Wright”, but rather than telling Maritime Super or NAB of his mistake he had again impersonated Wright in seeking to correct the mistakes.
McCormack and his client had then visited the second Wright to assure him the problems would be put right but discovered that as a result of his actions the accounts had been frozen.
McCormack later resigned from his employment with NAB.
