ASIC slaps conditions on Aurora’s AFSL
The Australian Securities and Investments Commission (ASIC) has imposed conditions on the financial services licence of Aurora Funds Management Limited, following inquiries into the misappropriation of investor funds.
Aurora is the responsible entity of several managed investment schemes listed on the Australian Securities Exchange, including the Aurora Property Buy-Write Income Trust (AUP).
ASIC’s enquiries related to the misappropriation of $1 million of investor funds from the AUP in February 2017 by Aurora’s former chief financial officer, Betty Poon.
At ASIC’s intervention, Aurora repaid the $1 million to the AUP and compensated it for lost earnings on those funds prior to any recovery.
However, the regulator said it remained concerned that the misappropriation, and Aurora’s failure to detect it for several months, occurred because of deficiencies in Aurora’s corporate governance and risk management frameworks.
Due to Poon having held several senior and conflicting roles that facilitated the occurrence and cover-up of her fraud, ASIC said it has imposed licence conditions that require Aurora to engage an approved independent expert to assess and report on the adequacy of its resources, corporate governance and risk management practices.
“The additional conditions imposed on Aurora’s licence reflect ASIC's priority of protecting investor money and ensuring that responsible entities have appropriate corporate governance and risk management standards in place to keep fund assets separate and secure,” ASIC commissioner Peter Kell said.
Aurora has agreed to the conditions and must engage an independent expert by 30 June 2018, the regulator said. The independent expert will report to ASIC and Aurora and provide interim recommendations for any steps that Aurora should take to ensure that its procedures are adequate by 1 October 2018.
ASIC said Aurora is required to inform it of any recommendations that it will not implement and explain why it will not do so. The independent expert will then provide a final report to ASIC and Aurora by 29 March 2019.
Recommended for you
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.
The Senate economics legislation committee has recommended Schedule 1 of the Delivering Better Financial Outcomes legislation be passed as it is a “faithful implementation” of the recommendations.
Treasurer Jim Chalmers has handed down his third budget, outlining the government’s macroeconomic forecasts and changes to superannuation.
