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ASIC Advisory 11-302: NSW tax consultant pleads guilty to insider trading

by Desanka.Vukelich 15. December 2011 15:58

11–302AD NSW tax consultant pleads guilty to insider trading

Thursday 15 December 2011

Former PricewaterhouseCoopers (PwC) senior consultant, Nicholas Glynatsis, has today pleaded guilty in Sydney’s Downing Centre Local Court to nine charges of insider trading following an ASIC investigation.

Mr Glynatsis, of Russell Lea, Sydney, was a PwC employee between February 2007 and January 2011.

ASIC alleges that between 20 November 2009 and 23 November 2010, Mr Glynatsis acquired securities and contracts for difference (CFDs) in his name and the names of two relatives ahead of eight corporate transactions, including six takeover bids, on which PwC was engaged to provide advice. Total profits from the trading amounted to approximately $50,000.

ASIC alleges that at the time Mr Glynatsis acquired the relevant securities and CFDs, he possessed inside information that he acquired through internal PwC databases holding confidential client information.

The alleged insider trading was identified by ASIC’s Market Surveillance team in September 2010 and referred to ASIC’s Market Integrity Deterrence team for investigation and enforcement action.

Mr Glynatsis is to appear before the Supreme Court on 3 February 2012 for arraignment. The Commonwealth Director of Public Prosecutions is prosecuting the matter.

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ASIC

ASIC Advisory 11-296: Former Gunns chairman charged with insider trading

by Desanka.Vukelich 14. December 2011 12:18

11-296AD Former Gunns chairman charged with insider trading

Tuesday 13 December 2011

Former Gunns Limited (Gunns) chairman, John Eugene Gay appeared in the Court of Petty Sessions in Launceston today charged with two counts of insider trading, following an ASIC investigation.

The matter was adjourned until 14 February 2012. Mr Gay will be required to enter a plea at this time.

Mr Gay was a director of Gunns Limited from 1980 to 2010 and was chairman of Gunns Limited from 2002 to 2010.

ASIC alleges that on December 2 and 4, 2009, while in possession of inside information relating to the financial performance of Gunns, Mr Gay sold more than 3.4 million Gunns shares. This trading was prior to the release of Gunns’ half year results on 22 February, 2010. Following this release, the Gunns share price fell substantially.

ASIC alleges Mr Gay possessed information that he knew or ought to have known was not generally available at the time of the sale, and if the information had been generally available, a reasonable person would expect it to have a material effect on the price or value of the shares.

The matter was referred to ASIC by the Australian Securities Exchange, before ASIC assumed responsibility for market supervision.

The Commonwealth Director of Public Prosecutions is prosecuting the matter.

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ASIC

ASIC Advisory 11-285: Appeal on sentence upheld for John Hartman

by Desanka.Vukelich 8. December 2011 10:55

11-285AD Appeal on sentence upheld for John Hartman

Wednesday 7 December 2011

The New South Wales Court of Criminal Appeal today upheld the appeal of Mr John Joseph Hartman against the severity of a sentence imposed on him last year for insider trading and tipping offences.

On 2 December 2010, Mr Hartman was sentenced to four years and six months imprisonment with a non-parole period of three years after pleading guilty to 19 insider trading charges and six tipping charges brought by ASIC. The offences were committed while Mr Hartman was employed by Orion Asset Management Limited as its equities dealer.

The Court of Criminal Appeal re-sentenced Mr Hartman to an overall term of three years imprisonment with a single pre-release period of 15 months. Mr Hartman must enter into a recognisance to observe and comply with conditions set by the court upon his release.

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ASIC

ASIC Advisory 11-280: ASIC reaches eighth Westpoint settlement

by Desanka.Vukelich 2. December 2011 15:32

11-280AD ASIC reaches eighth Westpoint settlement

Friday 2 December 2011


ASIC has reached a settlement of its Federal Court proceeding against Queensland-based financial services firm, Strategic Joint Partners Pty Ltd (SJP).

The settlement concerns a claim for compensation on behalf of SJP clients (Group Members) who invested in the failed Westpoint Group of companies and is one of eight obtained by ASIC. If approved by the Court, SJP clients will receive over $1.39 million in compensation.

The settlement was reached without any admission of liability by SJP.

In March 2008, ASIC commenced proceedings against SJP following concerns the firm had been negligent and had breached the conditions of its Australian financial services licence in providing advice to its clients.

On 1 December 2011, the Court made orders for ASIC to communicate with all Group Members, providing details of the compensation they will likely receive and providing them with an opportunity to object to the settlement.

The process for approval of the settlement will include:

  • writing to Group Members, providing details of the compensation they will receive and giving them the opportunity to lodge with the Court any objection to the settlement
  • the Court considering the submissions of ASIC (and SJP) and any Group Member as to why the settlement should or should not be approved, and
  • the distribution of compensation to Group Members by ASIC if the settlement is approved (following a period to allow for any appeals).


After Group Members have had time to consider their position, ASIC will file a further application seeking final Court approval of the settlement. The Court has agreed to hear the application for final approval on 23 December 2011.

Background


The investors in Westpoint-related financial products had an outstanding total capital invested of $388 million as at January 2006 when the Group collapsed. Since November 2007, ASIC has launched 19 civil actions seeking to recover funds for investors in the majority of the Westpoint companies, including:

  • a claim against KPMG, the former auditors of the Westpoint Group
  • claims against the directors of nine Westpoint mezzanine companies and various entities associated with a director
  • claims against seven financial planners, and
  • a claim against State Trustees Limited.


To date, ASIC has successfully settled claims against: certain directors of the Westpoint group of companies and KPMG ($57 million); Masu Financial Management Pty Ltd; Professional Investment Services Pty Ltd ($5.9 million); Bongiorno Financial Advisers Pty Ltd and Bongiorno Financial Advisers (Aust) Ltd ($2.6 million); State Trustees Ltd ($13.5 million), Dukes Financial Services Pty Ltd and Joseph Dukes ($1 million) and Glenhurst Corporation Pty Ltd ($2.5 million).

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ASIC

ASIC Advisory 11-279: ASIC review: EDR schemes handling of complaints when members commence debt recovery legal proceedings

by Desanka.Vukelich 2. December 2011 15:21

11-279AD ASIC review: EDR schemes handling of complaints when members commence debt recovery legal proceedings

Friday 2 December 2011


ASIC today released a consultation paper to commence its review of external dispute resolution (EDR) jurisdiction over consumer complaints in cases where members have commenced legal proceedings to recover debts from consumers: Consultation Paper 172: Review: EDR jurisdiction over complaints when members commence debt recovery proceedings (CP 172).

The review seeks feedback on whether ASIC should refine its policy settings in Regulatory Guide 139 Approval and oversight of external dispute resolution schemes (RG 139) and fulfils a commitment ASIC undertook when it approved the Financial Ombudsman Service Limited’s (FOS) Terms of Reference in December 2009 to review the existing requirements in RG 139.

The policy settings under review, as outlined in RG 139.77-RG 139.79, require both EDR schemes - FOS and the Credit Ombudsman Service Limited (COSL) - to handle complaints under their Terms of Reference or Rules where members have commenced debt recovery legal proceedings. This must cover proceedings that are in their early stages, but need not cover those that have progressed beyond the complainant lodging a defence or defence and counterclaim.

This jurisdiction is primarily intended to assist complainants in hardship, especially those who may have taken out credit or margin lending products. However, it also applies where providers of other financial products have commenced debt recovery legal proceedings (i.e. insurance, investments and payment systems-related products).

ASIC Commissioner, Mr Peter Kell, said, ‘This review will help ASIC assess whether the EDR framework is working efficiently and effectively, and is part of our key priority to ensure consumers have an avenue for complaining or seeking help when they may most need it.

‘We encourage feedback from consumers and their representative groups, industry, ASIC approved EDR-schemes and other interested stakeholders’, he said.

Comments on the consultation paper are due by Monday 27 February 2012.

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ASIC

Australian Insurance Law Bulletin, Vol 27 Issue 2

by Desanka.Vukelich 28. November 2011 11:15

Volume 27, Issue 2 of the Australian Insurance Law Bulletin is now available at LexisNexis Online.

In this issue, you will find the following articles:

  • ‘Domestic arbitrators required to make reasoned awards’, by Dr Andrew Lu OAM of Minter Ellison
  • ‘New uncertainty as to defence costs cover under D&O insurance’, by Rehana Box and Crystal Lawton of Blake Dawson
  • ‘Developments in proportionate liability’, by Ivan Griscti of Seven Wentworth
  • ‘The year that was – in some ways, insurers might prefer it wasn’t’, by Greg Pynt of Pynt and Partners, Perth

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Australian Insurance Law Bulletin

Competition and Consumer Law News, Vol 27 Issue 4 now online

by Desanka.Vukelich 28. November 2011 11:13

Volume 27, Issue 4 of Competition and Consumer Law News is now available on LexisNexis Online.

This issue contains the following articles, plus a case note and news update:

  • ‘ACCC guidance on manufacturer warranties: A commonsense approach to enforcement lessens the burden of new rules’, by Richard Westmoreland and Dean Hunt of HWL Ebsworth
  • ‘ACCC’s year in review and what we can expect in the year to come’, by Tihana Berak of Blake Dawson
  • ‘Casenote: ACCC v Metcash Trading Ltd [2011] FCA 967; BC201106415’, by Michael Bradley of Marque Lawyers
  • News update: Competition and Consumer News

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ASIC Advisory 11-247: Former Sydney financial adviser charged with fraud

by Desanka.Vukelich 10. November 2011 12:22

11-247AD Former Sydney financial adviser charged with fraud

Wednesday 9 November 2011


A former Sydney-based financial adviser yesterday faced a Sydney court charged with fraud following an ASIC investigation.

James Patrick Hobson, a senior financial adviser, faced Downing Centre Local Court on Tuesday 8 November 2011. It is alleged he defrauded four clients of more than $300,000 and attempted to defraud one of $120,000, over a five month period.

Mr Hobson, employed by Binma Pty Ltd trading as Noall & Co, was charged with four counts of fraudulent misappropriation of a valuable security under Section 178A of The Crimes Act (NSW) and one count of attempting to fraudulently misappropriate a valuable security under Section 178A and section 344A of The Crimes Act (NSW).

It is alleged that between March and August 2008, Mr Hobson misappropriated $307,000 and attempted to misappropriate $120,000 of client funds whilst working for Noall & Co.

In each instance, it is alleged Mr Hobson advised clients to invest in international shares via a product called Skandia. It is alleged that Mr Hobson did not in fact invest these funds on behalf of these clients as per their instructions, but instead used the funds for his own personal use.

The matter will return to court on 10 January 2012.

Mr Hobson was granted conditional bail.

The matter is being prosecuted by the Commonwealth Director of Public Prosecutions.

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ASIC

ASIC Advisory 11-245: Former currency trader pleads guilty

by Desanka.Vukelich 10. November 2011 12:18

11-245AD Former currency trader pleads guilty

Wednesday 9 November 2011


Krishnan Rasaratnam, a former director of Strategic Alternative Investments Pty Ltd (SAI), has pleaded guilty to six charges relating to dishonest conduct and deception.

Facing Sydney’s Downing Centre District Court, Mr Rasaratnam pleaded guilty to one count of using a false instrument and five counts of dishonest conduct in relation to providing a financial service.

In addition, one charge of using a false instrument, three charges of dishonest conduct and two charges of making false statements to ASIC will be taken into account in the sentencing of Mr Rasaratnam.

SAI was the holder of an Australian financial services (AFS) licence and provided product advice and dealt in derivative and foreign exchange contracts. ASIC cancelled SAI’s licence on 1 December 2006.

Between February 2006 and January 2008, Mr Rasaratnam raised funds from investors by making false and misleading claims that SAI investments were low risk, carried a high return and in some cases were capital guaranteed by a major investment bank.

Mr Rasaratam, who was not licensed as a currency trader, misappropriated the investor funds by diverting those funds to his personal trading account. As a result of the purported investment activity by SAI investors incurred losses of more than $12 million.

Mr Rasaratnam was arrested and charged in September 2009 (refer 09-170AD).

The maximum penalties for the offences are 10 years imprisonment for using a false instrument, five years imprisonment for dishonest conduct in relation to providing a financial service and five years imprisonment for making false and misleading statements to ASIC.

Mr Rasaratnam appeared before the Court on 28 October 2011.

Mr Rasaratnam will be sentenced on 29 March 2012.

The Commonwealth Director of Public Prosecutions is prosecuting the matter.

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ASIC

ASIC Advisory 11-244: ASIC bans authorised representative of Romad Financial Services

by Desanka.Vukelich 10. November 2011 12:09

11-244AD ASIC bans authorised representative of Romad Financial Services

Monday 7 November 2011


ASIC has banned Mr Rory Mor Macleod Deutsch, of Box Hill North in Victoria, from providing financial services for four years following his failure to comply with financial services laws.

Mr Deutsch has been an authorised representative of Romad Financial Services Pty Ltd (RFS) and the Responsible Manager and Key Person of RFS’s Australian financial services licence (AFS) licence since June 2004.

An ASIC investigation found that Mr Deutsch had failed to comply with financial services laws between 1 April 2009 and 28 April 2011 and that there may be reason to believe that he would not comply with financial services law in the future.

In particular, ASIC found Mr Deutsch:

  • carried on a financial services business by issuing interests in two unregistered managed investment schemes without holding an AFS licence or being authorised under RFS’s AFS licence or any other AFS licensee, to issue interests in managed investment schemes;
  • engaged in conduct in relation to a financial product or service that was misleading or deceptive, or was likely to mislead or deceive retail investors, specifically the making of certain representations and the failure to disclose material facts in offer documents and trust deeds relating to the two unregistered managed investment schemes.

The action to remove Mr Deutsch from the industry is part of ASIC’s focus to improve industry standards and protect the investing public from individuals who operate outside the financial services laws.

Mr Deutsch’s banning follows action taken by ASIC to cancel the AFS licence of RFS.
RFS has been granted an order by the Administrative Appeals Tribunal (AAT) to stay the cancellation until determination of a review of ASIC’s decision.

Mr Deutsch has the right to appeal to the AAT for a review of ASIC’s decision.

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ASIC



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