Adviser Christopher Edward Luff banned – July 26
Adviser Christopher Edward Luff has been banned from providing financial services for five years after multiple concerns, including giving inappropriate advice and not acting in the best interest of clients. The AFS licence of his business, Build Your Wealth Pty Ltd, has also been cancelled.
Luff was referred to an ASIC Delegate after concerns about the financial product advice he provided, how he managed conflicts of interest, and for his involvement in a self-managed superannuation investment structure regarding the Storehouse Residential Trust ARSN 135 812 074. He failed to make clients aware of the risk of investing into the Trust. An interim stop order was also made out to the Storehouse Trust in September 2023 regarding deficiencies in the target market determination.
Luff and the company applied to the Administrative Appeals Tribunal (AAT) seeking a confidentiality order, and a review and a stay of ASIC’s decision. The AAT granted an interim stay of the cancellation order only, but refused the substantive stay application and confidentiality orders.
Companies sued for futures market manipulation – July 25, 2024
Civil penalty proceedings have commenced against COFCO International Australia Pty Ltd and COFCO Resources SA for alleged manipulation of the ASX24 market for Eastern Australia Wheat futures January 2023 (WMF3) contracts.
The companies allegedly manipulated contracts on 34 times between January 17 and March 3, 2022, where they placed orders shortly before the closing of the ASX24 to affect the daily settlement price for the WMF3 contract.
ASIC is seeking declarations and pecuniary penalties against both companies.
EuropeFX director Pedro Sasso banned – July 25, 2024
Pedro Eduardo Sasso, the director of Maxi EFX Global AU Pty Ltd, has been banned from being a director of or controlling a financial service entity for five years for not being a fit and proper person in this respect.
Sasso was found:
- failing to have oversight of EuropeFX’s operation, and to mitigate or address problems within the business operations;
- failiing to address or properly investigate issues that arose around client complaints; and
- abrogated his supervision and oversight responsibilities to persons offshore – without any monitoring structures in place.
Sasso applied for a review of the banning on May 8, including for stay and confidentiality orders, which was later refused by the Administrative Appeals Tribunal after an interlocutory hearing.
ASIC earlier commenced proceedings against Union Standard International Group Pty Ltd (now in liquidation) – which EuropeFX was the corporate authorized representative (CAR) of. ASIC also commenced civil penalty proceedings against its former CARs, EuropeFX and TradeFred.
Suspended credit licence of John Adicho – July 25, 2024
John Adicho, a Melbourne-based credit licensee, has been suspended from engaging in credit assistance activities for six months after failing to discharge or perform the obligations for a person who engages in credit activities. Including being likely to contravene credit legislation.
Adicho had earlier been expelled from the Australian Financial Complaints Authority over failure to pay fees, failing to lodge six annual compliance certificates, and not paying industry funding levies to ASIC.
Four charged in Telegram ‘pump and dump’ conspiracy – July 23, 2024
Syed Yusuf, Larissa Quinlan, Emma Summer, and Kurt Stuart have all been charged with conspiracy to commit market rigging and false trading, to pump up shares’ price before dumping them at inflated prices.
Allegedly, the four formed a private group on Telegram to discuss and select penny stocks, then later announce which stocks to get in the public Telegram group ‘ASX Pump and Dump Group.’ A total of nine announcements were made in September 2021, and each of the four are believed to have purchased some of the stocks that were discussed.
Quinlan was charged with dealing in proceeds of crime – money or other property over A$10,000 pursuant to section 400.6(1) of the Criminal Code Act 1995 (Cth). Yusuf, Summer, and Stuart were charged with section 400.4(1) of the Criminal Code Act 1995 (Cth).
The defendants were also charged with conspiracy to commit market rigging and false trading, contravening sections 11.5(1) of the Criminal Code (Cth) and 1041B(1)(b) of the Corporations Act 2001 (Cth).
They face a maximum penalty of 15 years’ imprisonment and a fine of over A$1m ($656,159) for market manipulation.
“Market manipulation is illegal. Pump and dump schemes are a form of financial fraud, eroding investor wealth, threatening the integrity of our markets.”
Joe Longo, Chair, ASIC
Travel restraint orders against Barry King – July 22, 2024
Travel restraint orders have been made against Melbourne-based financial advisor Barry David King to prevent him leaving Australia during an ongoing investigation. AISC is currently investigating King and the King Financial Group of companies for alleged financial misconduct in a network of companies and related trusts.
King is currently a licensed financial advisor operating in Queensland, New South Wales and Victoria through Wealth Effect Advisory Pty Ltd, King Financial Group (VIC) Pty Ltd, King Financial Group (NSW) Pty Ltd, and King Financial Group (QLD) Pty Ltd. He is also a director of Wealth Effect Advisory.
The travel restraint orders are valid until April 1, 2025.
ASIC news week 30
Clean markets
According to ASIC’s latest market cleanliness report Equity market cleanliness snapshot 786 July 2024, Australia’s equity markets continue to operate with a high level of integrity, as well as remaining consistently among the cleanest in the world.
“Clean financial markets are essential for the financial wellbeing of Australians and fundamental to an efficient economy,” said Chair Joe Longo.
He also pointed out that the Commission will continue to invest in data and technology to detect all forms of market misconduct. “As our financial landscape evolves, we will expand our market cleanliness work to capture private markets and products in the coming year.”
New financial reporting and audit obligations
New requirements came into force in July 2023, which now make superannuation trustees required to lodge audited financial reports for funds with the Commission within three months of the end of the fund’s financial year.
It was the Treasury Laws Amendment (2022 Measures No. 4) Act 2023 that came into force, which extends the financial reporting and auditing obligations under Chapter 2M of the Corporations Act 2001, and expects the reports to include the financial statements and notes, directors’ declaration, auditor’s and director’s reports.
Annual insolvency data – increased failings
More than 11,000 companies entered external administration for the first time in 2023-24, according to ASIC’s annual insolvency data. The figure is slightly higher than the previous peaks in in 2011–12 and 2012–13, but it is notable is that there are also more companies now than before – nearly 3.4 million compared to two million in 2012.
Overall, external administrations grew by 39% in 2023–24 compared to 2022–23, mostly within:
- construction (27%);
- accommodation and Food Services (15%); and
- other services (9%).
Restructuring appointments also grew by over 200% in 2023–24 compared to the year before, and represented 12.9% of all external administrations.
Of the 573 companies that entered restructuring after January 1, 2021, and completed their restructuring plan by June 30, 2024:
- 89.4% remain registered;
- 5.4% have gone into liquidation (one had entered into a Deed of Company Arrangement); and
- 5.2% were deregistered.