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.
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.
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.
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.
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).
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.
17. November 2011 15:07
11-258AD Melbourne director banned for five years
Thursday 17 November 2011
A Melbourne director has been disqualified from managing corporations for five years following ASIC’s inquiries into his role in five failed companies that had deficiencies of over $26 million.
Mr Frank Cardamone, of Prahran, was a director of failed companies S.T.A Corporation Pty Limited, Stafford Services Pty Ltd, Burns International Security Services (Australia) Pty Ltd, Greight Pty Ltd and Good 2 Go Admin Pty Ltd.
ASIC found that in relation to Stafford Services Pty Ltd, Mr Cardamone had at various times between 2003 and 2006:
- failed to exercise reasonable care and diligence in exercising his powers and discharging his duties regarding the lodgment of documents with the Australian Taxation Office;
- failed to prevent the company from incurring debts where there were reasonable grounds for suspecting that the company was insolvent;
- failed to respond to the liquidator’s written requests for information about the company’s business, property, affairs and financial circumstances; and
- failed to ensure the maintenance of financial records.
ASIC also found that Mr Cardamone failed to submit a report as to affairs to the receivers of Good 2 Go Admin Pty Ltd in 2008.
Mr Cardamone’s disqualification is consistent with ASIC’s focus on ensuring gatekeepers such as company directors are held to account.
Mr Cardamone has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC’s decision.
17. November 2011 15:00
11-253AD ASIC obtains orders against Australia AFT Finance Market Pty Ltd
Monday 14 November 2011
ASIC has obtained interim orders in the Federal Court in Adelaide against Australia AFT Finance Market Pty Ltd (AFT), a company that operated the website www.aftfx.com.au promoting trading in forex, metals and contracts for difference (CFDs) through the use of the MetaTrader 4 platform.
The orders were obtained because AFT is carrying on an unlicensed financial services business.
The orders obtained restrain AFT from marketing any financial product including MetaTrader 4 and providing any financial product advice.
The court orders have also frozen over $180,000 currently held in a foreign exchange account held by AFT.
ASIC obtained the orders on 4 November 2011.
The matter will return to court on Thursday 8 December 2011.
AFT is incorporated in Australia but ASIC is concerned that its sole director appears to have never been a resident in Australia.
ASIC is also concerned that the content of the website, www.aftfx.com.au , contained false statements including that it was formerly named Adelaide Finance Market Co Ltd and, after merging with a company named Brisbane Financial Securities Co. Ltd, changed its name to AFT Finance Market Holdings Limited. No companies with those names have been incorporated in Australia.
During its investigation, ASIC identified another website, www.nftfx.com, relating to a company called Australia NFT Finance Market Pty Ltd which contains many of the same claims as the AFT website. Australia NFT Finance Market Pty Ltd is not a company incorporated in Australia.
17. November 2011 14:56
11–251AD ASIC proposes new policy for downstream acquisitions
Friday 11 November 2011
ASIC is inviting industry feedback on proposed updates to its policy relating to downstream acquisitions which can occur as a result of an acquisition in another company.
Consultation Paper 170 Downstream acquisitions: update to RG 71 (CP 170) details ASIC’s plans to update guidance on the takeovers exception for downstream acquisitions set out in item 14 of s611 of the Corporations Act 2001. A downstream acquisition occurs when a person acquires a relevant interest in more than 20% of the voting securities in an Australian company (downstream entity) as a result of an acquisition in another company, including a foreign body corporate (upstream entity). Acquisitions of this kind can have a significant impact on the control of the downstream entity and therefore, its shareholders.
ASIC’s policy on downstream acquisitions is currently set out in Regulatory Guide 71 Downstream acquisitions (RG 71). The proposed updates will take into account the significant developments in Australian takeover law since the guide was last updated in 1996. These developments include amendments to the exception for downstream acquisitions in item 14 and an extension of the takeovers regime in Chapter 6 to listed managed investment schemes.
The consultation paper also includes proposed changes to the conditions that may apply when we grant relief for a downstream acquisition that is not exempt under item 14.
Finally, ASIC’s updated guide will provide entities and their advisers with our current views on how the exception in item 14 applies, and our policy on granting relief.
ASIC is seeking comments on the proposed updates to RG 71 by 16 January 2012 and plans to publish a final guide later in 2012.
17. November 2011 14:52
11–250AD ASIC confirms ASX readiness to launch PureMatch
Friday 11 November 2011
ASIC today confirmed it is satisfied that the Australian Securities Exchange (ASX), prospective participants and data vendors are ready for ASX’s new order book, PureMatch, to commence operating from 28 November 2011.
ASX has confirmed its systems and market data connections have been tested and are operationally ready for the commencement of PureMatch, including a re-testing of its systems in the last week. ASX has also provided a third party expert report that confirms this.
ASX has confirmed to ASIC that the circumstances surrounding the ASX Trade outage of 27 October 2011 have been isolated and will not affect the operation of PureMatch.
PureMatch will commence with a soft launch, trading no more than 10 securities for at least two weeks. ASIC will monitor this limited launch and continue to work with ASX and industry participants to ensure a smooth and orderly transition and to maintain fair and efficient markets.
ASIC has given a waiver to participants so they do not need to include PureMatch market data in their consolidated best bid and offer data until 1 March 2012.
PureMatch is an alternative order book that will operate in parallel to ASX TradeMatch, the primary existing ASX order book through which trading in ASX takes place. PureMatch will provide an alternative mechanism for trading of the most liquid cash market products which are traded on ASX’s TradeMatch.
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.