Perth property developer disqualified from corporation management – December 24, 2024
Allen Bruce Caratti, of Perth, Western Australia, has been disqualified from managing corporations for a period of four years, following his involvement in three failed companies.
Caratti was a director of three land development companies in which. significant fialures of governance and oversight were detected. These included;
- failing to lodge a tax return and keep proper business records;
- failing to lodge business activity statements or tax returns, and failure to register for an Australian Business Number;
- providing inconsistent information on land. costs and failing to report sales;
- providing unsupported claims for tax deductions.
Caratti provided a signed assurance that he would resign his director and secretary positions of certain companies while investigations took place, but this did not actually occur, so he was either willingly or carelessly making false representations to ASIC. ASIC found this supported the disqualification decision.
Sanlam agrees to review of its compliance processes – December 23, 2024
South African financial services conglomerate Sanlam Group will have its compliance processes reviewed by an independent expert after admitting to breaching its licensee obligations. It has provided a court enforceable undertaking (CEU) to ASIC.
ASIC investigations had led to concerns that Sanlam Private Wealth Pty Ltd was failing to adequately supervise its authorized representatives. A number of its corporate authorized representatives were fintechs that offered online trading platforms and crypto-based products that posed risks to retail clients.
ASIC Deputy Chair Sarah Court said: “At one point, Sanlam had 42 CARs and 71 authorised representatives operating under its licence. Despite this, it had plainly inadequate resources and processes to ensure its diverse cohort of authorised entities complied with the law and to oversee those who used its licence to offer risky financial products to retail clients.
“Licensees like Sanlam must have robust compliance processes that are fit-for-purpose to ensure that those who operate under their licence comply with the law and don’t place Australian investors at risk.”
Perth accountant charged over alleged insider trading – December 23, 2024
Vittorio Letizia appeared on December 20, 2024, at Perth Magistrate’s Court charged with five counts of insider trading in connection with Genesis Materials Ltd shares.
Further developments in Courtenay House misconduct case – December 23, 2024
David Sipina of Prairiewood NSW, a former contractor and promoter of Courtenay House investments, has become the third person to be sentenced in connection with the Courtenay House misconduct case. He has been given a three-year prison sentence, to be served by way of an intensive correction order.
Sipina had entered guilty pleas on two charges. The first was for aiding and abetting former Courtenay House director Tony Iervasi to carry on an unlicensed financial services business. The second was for dealing with what he believed to be the proceeds of crime worth more than A$1m ($630,000) or more.
Iervasi had already entered a guilty plea to five criminal charges including engaging in dishonest conduct and running a Ponzi scheme. Sipina’s role was to manage and recruit 215 investors, and to market the scheme in person and online. He received around A$3.9m ($2.45m) for his part in the scheme.
Sipina was not aware the businesses were a Ponzi scheme, but he did know they were providing unlicensed financial services advice.
ASIC Deputy Chair Sarah Court said: “ASIC is committed to investigating people who engage in and profit from dishonest conduct. Mr Spina’s sentencing should be a deterrent to those who operate outside of the law and whose actions can have a detrimental effect on consumers who entrust their money with others.’
In addition to sentences handed to Sipina and Iervasi, former contractor Athan Papoulias has been given a two-year prison sentence, to be served by way of an intensive corrections order, for his role.
Full details of the case and the background can be found on ASIC’s website.
CFD issuers found to be engaged in “unconscionable conduct” – December 20, 2024
Union Standard International Group Pty Ltd (USG) and two of its former corporate authorized representatives, BrightAU Capital Pty Ltd (trading as TradeFred) and Maxi EFX Global AU Pty Ltd (trading as EuropeFX), have been found to have engaged in systemic unconscionable conduct as well as a raft of other contraventions of the law between 2018 and 2020.
Customers of EuropeFX and Tradefred lost A$83m ($51.6m) due to “systemic unconscionable conduct, misleading and deceptive conduct and the provision of unlicensed personal advice.”
ASIC said that: “The onboarding processes of these companies actively sought to attract customers who were inexperienced or vulnerable.”
The Court also found that USG breached its general obligation to ensure financial services covered by its AFS licence were provided ‘efficiently, honestly and fairly” when customers in China were offered its services. The court said the company knew, or ought reasonably to have known, that those customers were likely be contravening Chinese law, and that it failed to take any reasonable steps to warn its customers that it was exposing them to potential civil and criminal liability in China.
As ASIC’s statement says: “This judgment has important implications for entities providing financial services under an AFS licence to customers outside of Australia.”
ASIC Deputy Chair Sarah Court said, ‘This outcome sets an important precedent for Australian based financial services licensees providing services such as margin forex trading to overseas customers under their AFS licence where such offerings are prohibited.
‘The conduct of licensees providing services to overseas customers under their AFS licences has attracted considerable attention from regulators globally and this judgment is important in protecting the reputation of Australia’s financial services licencing regime.’
Full details are on ASIC’s website.
Equitise Pty Ltd has AFS licence suspended – December 20, 2024
As Equitise is under external administration, its AFS licence has been suspended until February 10, 2025.
Mohammad Mirzan Bin Mansoor and Damien Mark Hodgkinson of Olvera Advisors Pty Ltd have been appointed as joint and several administrators.
Responsible lending failures and DDO breaches by Swoosh – December 19, 2024
Penalty proceedings have commenced against Ausfinancial Pty Ltd, trading as Swoosh Finance, for allegedly breaching responsible lending obligations when providing credit contracts to 11 consumers. Including failing to assess if loans were suitable, and failing to make inquiries about the borrower nor verifying the findings.
According to ASIC, Swoosh also breached design and distribution obligations (DDO) by not reviewing its target market determinations, and kept providing credit contracts even though it had received increasing complaints from customers or the Australian Financial Complaints Authority.
Allegedly, these failures happened between October 2019 and October 2024, which are violations of:
- s 994C(4) of the Corporations Act 2001 for breaching DDO; and
- ss 128, 130(1), 131(1) and 133(1) of the National Consumer Credit Protection Act 2009 for breaching the responsible lending obligations.
Binance sued for consumer protection failures – December 18, 2024
Oztures Trading Pty Ltd, trading as Binance Australia Derivatives, has been sued after consumer protection failures of more than 500 customers. Allegedly, Binance offered crypto derivative products to 505 retail investors who were misclassified as wholesale clients – 83% of its Australian client base. This happened between July 7, 2022, and April 21, 2023, and many of the customers suffered significant financial losses. ASIC alleges that Binance failed to:
- Provide a Product Disclosure Statement to retail clients;
- make a Target Market Determination;
- have a compliant internal dispute resolution system;
- make sure that its financial services were provided efficiently, honestly and fairly;
- comply with the conditions of its licence; and
- ensure that employees were properly trained and competent.
“Our case alleges Binance’s compliance systems were woefully inadequate and exposed more than 500 clients to high-risk, speculative products without the right consumer protections in place,” said ASIC Deputy Chair Sarah Court
With the charges, ASIC seeks penalties, declarations and adverse publicity orders.
Former liquidator sentenced to prison
Peter Andrew Amos, a former registered liquidator and external administrator, has been sentenced to four years imprisonment after pleading guilty to dishonestly using his position to gain advantage for himself and his business – violating section 184(2)(a) of the Corporations Act 2001.
Amos was a registered liquidator and business owner of Amos Insolvency Pty Ltd, and was found transferring A$2,998,546.59 ($1,900,864), plus A$19,936.86 ($12,639) for the scheduled offences, from multiple companies to his own company. The funds were taken from Mikcon Employment Services Pty Ltd, TPC (Vic) Pty Ltd, P O W 4X4 Pty Ltd, A-Force Electrics Pty Ltd, and Conomi Group Pty Ltd, and was used to pay unrelated expenses of Amos Insolvency and for personal use.
“Mr Amos systematically misappropriated funds … amounting to a serious betrayal of trust and an abuse of the obligations expected of administrators and liquidators.”
ASIC Deputy Chair Sarah Court
Due to the conviction, Amos will be disqualified five years from managing corporations after he is released from prison. He is also no longer a registered liquidator and cannot take on any appointments as an external administrator.
Director charged with making false statements – December 17, 2024
Former director Benjamin Thomas Molloy has been convicted and pleaded guilty of making false statements to ASIC – violating sections 1308(1) and 1308(2) of the Corporations Act 2001.
Her Honour Magistrate Hartnett called the offending “objectively serious” where the offending was ‘squarely in the context of family violence’, which Molloy used to “facilitate a structure of some complexity that promoted [his] lifestyle and the operation of [his] business interests.”
He was sentenced to a recognisance release order at A$2,000 ($1,268) with a fully suspended sentence of 12 months’ imprisonment on the condition to be of good behaviour for two years.
HSBC Australia sued for failing to protect customers – December 16, 2024
HSBC Bank Australia Limited has been sued for failing to protect customers from being scammed out of millions of dollars.
Allegedly, a lot of the bank’s customers experienced unauthorized transactions between January 2020 and August 2024, where scammers often got access to accounts by impersonating HSBC Australia staff. During that period, HSBC received around 950 reports of unauthorised transactions – which resulted in customer losses of about A$23m ($15.6m), of which almost A$16m ($10.1m) occurred between October 2023 and March 2024.
According to ASIC, HSBC Australia failed to have:
- From January 2020: proper systems and processes to investigate reports of unauthorised transactions within set timeframes, and to promptly reinstate banking services to customers who reported unauthorised transactions; and
- From January 1, 2023 to June 1, 2024: proper controls to prevent and detect unauthorised payments.
Failures which are violations on s 912A(1)(a) of the Corporations Act 2001 (Cth), and s 47(1)(a) of the National Consumer Credit Protection Act 2009 (Cth).
HSBC also failed to restore customers’ full access to their bank accounts, which on average took 95 days to do so. One customer had to wait 542 days to get full access.
With the charges, ASIC is seeking declarations of contraventions, pecuniary penalties, adverse publicity orders, and costs.
“‘We allege HSBC Australia compounded the problem by failing to comply with its obligations under the ePayments Code … on average taking 145 days to investigate customers’ reports.”
ASIC Deputy Chair Sarah Court
With the charges, ASIC is seeking declarations of contraventions, pecuniary penalties, adverse publicity orders, and costs.
Court updates
ASIC successfully defends receivers’ application for indemnity – December 18, 2024
The court has dismissed an application from the receivers of A One Multi Services Pty Ltd (AOMS) for an indemnity against ASIC.
Earlier in October 2021, ASIC obtained to appoint receivers to, and an injunction against, AOMS after suspecting engagement in unlawful activity. John Ross Lindholm and Timothy James Michael (who was replaced by William Colwell) were appointed as receivers.
Before the receiverships ended in August 2024, the receivers filed an application with the Court seeking:
- Approval for their remuneration from June 1, 2022, to April 30, 2023, and that the amount would be recovered from the property of AOMS – which was approved.
- An indemnity from ASIC to cover any shortfall in the monies available from AOMS assets to pay their remuneration and disbursements – which was dismissed.
The Court said that the receivers knew about the terms and risks of the appointment, and especially if the receivership progressed, the receivers “would be unable to realise sufficient assets to cover their expenses.”
Aryn Henry Hala, the sole director, was earlier in February charged with 9 offences of carrying on a financial services business without a licence, and the prosecution continues.
ASIC news week 51
ASIC industry funding FY 2023–24
The annual dashboard which outlines ASIC’s regulatory costs by sector and subsector has now been updated with FY 2023-24. The costs reflect the Commissions costs of regulating the subsectors these organisations operate in.
For all sectors, the total regulatory costs recoverable through levies by regulatory activity came up to A$63.284m ($40.1) for supervision and surveillance, and A$124.789m 9$79.2m) for enforcement.
| Sector | Total regulatory costs to be recovered by levies (excluding charities) |
|---|---|
| Corporate sector | A$89.590m ($56.8m) |
| Deposit taking and credit sector | A$50.920m ($32.3m) |
| Investment management, superannuation and related services sector | A$58.528m ($37.1m) |
| Corporate sector | A$60.451m ($38.4m) |
| Financial advice sector | A$49.519m ($31.4m) |
| Insurance sector | A$19.101m ($12.1m) |
| All industry sectors | A$328.108m ($208.2m) |
