PKF admits contraventions over expert report engagements – June 20, 2024
ASIC has accepted a court-enforceable undertaking from Australian Financial Services (AFS) licensee PKF Melbourne Corporate Pty Ltd (PKF). An ASIC investigation had raised concerns over three independent expert report engagements that resulted in a failure to ensure its financial services “were provided efficiently, honestly, and fairly.” Additional concerns were raised about the ability to manage conflicts of interest.
ASIC Deputy Chair Sarah Court said: “Independent experts play a gatekeeper role in corporate transactions, and their reports are relied on by investors to make economic decisions. Robust policies and procedures mitigate the chances of reports containing misleading opinions and allow experts to demonstrate compliance with their statutory obligations.”
Infringement notice issued on Ascot Securities – June 20, 2024
The notice issued by the Markets Disciplinary Panel (MDP) requires Ascot to pay a penalty of AS$3.1m ($2m) and to enter into an enforceable undertaking after the company failed to comply with the infringement notice deadline of December 21, 2023.
The MDP had “reasonable grounds” to believe Ascot had contravened s798H(1) of the Corporations Act, and that there was a broad failure to have “appropriate supervisory policies, procedures, and resources to identify and report suspicious trading” in place.
Ascot ceased trading in January 2024 and has informed ASIC it will be wound up.
Assets of Shield Master Fund frozen – June 19, 2024
Interim orders to freeze the fund have been obtained from the Federal Court to protect investor funds while an investigation is ongoing. The fund’s responsible entity is Keystone Asset management Ltd and former Keystone director Paul Chiodo has been ordered to surrender his passport. Neither Keystone nor Chiodo have had the opportunity to respond to ASIC’s application.
ASIC appeals decision to relieve Block Earner from a penalty – June 18, 2024
Block Earner, trading under Web3 Ventures Pty Ltd, was previously found to have made serious contraventions in its unlicensed offering of the crypto-related product ‘Earner’. Yet, the Federal Court relieved the company from paying a penalty.
ASIC has now appealed the Federal Court’s decision, and the appeal will be heard by the Full Federal Court.
Crowd-sourced funding regime stop order on Hirehood Pty Ltd – June 13, 2024
Hirehood Pty Ltd has been issued an interim stop which will prevent it from offering securities under its crowd-sourced funding (CSF) offer document published on the VentureCrowd Pty Ltd intermediary platform
The interim order is valid for 21 days unless revoked earlier, and is the first one made out to a CSF under the Corporations Act 2001.
The order was issued in relation to Hirehood’s use of a nominee arrangement, which did not permit investors to directly acquire ordinary shares in Hirehood. The offer document also failed to comply with the minimum information requirements.
Cancelled or suspended AFS licenses
Sug Ou Jeung – June 14, 2024
The AFS licence of financial services provider Sug Ou Jeung has been cancelled due to findings that Sug Ou Jeung never used it, and had not provided any services within six months of when the licence was granted.
Haywards Audit Pty Ltd – June 13, 2024
The AFS licence of Haywards Audit Pty Ltd has been cancelled sue to the company no longer carrying on a financial services business.
Responsible Entity Services Limited – June 13, 2024
Responsible Entity Services Limited is currently under external administration, and the AFS license has therefore been suspended until June 11, 2025.
ASIC news weeks 24–25
Speeches
On June 14, Chair Joe Longo made an opening statement at the Parliamentary Joint Committee on Corporations and Financial Services, Oversight of ASIC, the Takeovers Panel and the Corporations Legislation. There, he spoke about ASIC’s enforcement work during the last 12 months, including:
- commencing over 130 new investigations – an increase of around 25% compared to the year before;
- filing 29 new civil proceedings in the Federal Court against 64 defendants – an increase of 11% in civil proceedings; and
- having investigations leading to 23 individuals charged by the CDPP for criminal offences with 16 convictions with a total A$936,000 ($618,287) in fines ordered by the courts.
“Our enforcement outcomes are strong – our record shows that ASIC is securing materially higher penalties than it did a decade ago,” Longo said.
On June 19, ASIC Commissioner Alan Kirkland spoke at the Professional Planner Licensee Summit to explain ASIC’s work on financial advice. He gave particular emphasis to supporting good advice on retirement income, and to supporting access to high-quality advice for all Australians through the Delivering Better Financial Outcomes initiative. Ensuring better retirement outcomes is one of ASIC’s current priorities.
He observed that there are fewer financial advisers after the introduction of professional standards reforms, but said “there are some signs that this trend may be easing.” Furthermore, Delivering Better Financial Outcomes is, he said, “likely to lead to a significant expansion in the number of firms that offer some kind of advice and the number of people involved in providing it.”
He outlined enforcement priorities as focussing on the following areas:
- Misconduct resulting in the systemic erosion of superannuation balances.
- Compliance with the reportable situations regime.
- Systemic compliance failures by large financial institutions resulting in widespread consumer harm.