5. July 2011 11:03
ASIC today announced it has suspended the Australian financial services licence (AFS licence) held by Seagrims Pty Ltd (Seagrims) until 27 November 2011.
Peter Seagrim and Anne-Marie Seagrim both of Port Augusta, who are the directors and responsible managers of Seagrims, have also both been banned by ASIC from providing financial services for three years.
This is another example of ASIC holding gatekeepers such as financial advisers to account. Between September 2008 and October 2009, Seagrims transferred 972 clients with funds totalling about $105 million into financial products issued by Astarra Capital Ltd, now called Trio Capital Ltd, (Astarra). Seagrims provides financial services to about 5000 clients with approximately $250 million in funds under management and has six offices in South Australia.
Following an investigation and subsequent hearing, ASIC suspended Seagrims AFS licence because Seagrims had not complied with its obligations as a financial services licensee under s 912A of the Corporations Act 2001. ASIC’s investigation found:
- Seagrims failed to take reasonable steps to ensure its authorised representatives made reasonable inquiries about client’s personal circumstances before recommending Astarra products to clients;
- Seagrims failed to provide information in its Financial Services Guide about fees and revenue it received from Astarra for recommending Astarra’s products to clients;
- Seagrims failed to comply with a condition of its AFS licence that it establish and maintain compliance measures that ensure it complies with financial services laws;
- Seagrims failed to comply with a condition of its AFS licence that it has total assets that exceed total liabilities or adjusted assets that exceeded adjusted liabilities; and
- Seagrims failed to notify ASIC of a significant breach relating to Statements of Advice and Statements of Additional Advice given to clients that recommended Astarra products.
ASIC will revoke the suspension if Seagrims applies to ASIC to have additional conditions imposed on its AFS licence relating to compliance measures and record keeping and satisfies ASIC that it can comply with the financial requirements conditions of its AFS licence.
Peter Seagrim and Anne-Marie Seagrim were both banned from providing financial services for three years after ASIC found they had not complied with financial services laws and will not comply with a financial services law. In particular, ASIC found:
- Peter and Anne-Marie Seagrim failed to ensure Seagrims complied with its obligations under s 912A of the Corporations Act 2001.
- Peter and Anne-Marie Seagrim gave Statements of Advice and Statements of Additional Advice to clients recommending Astarra products that failed to disclose an equity return agreement between Seagrims and Astarra and monetary assistance Seagrims received from Astarra for advertising.
- Anne-Marie Seagrim recommended Astarra products to clients without making reasonable inquiries about client’s personal circumstances.
- Anne-Marie Seagrim failed to give a Statement of Advice to a client when recommending the client switch superannuation funds.
Seagrims, Peter Seagrim and Anne-Marie Seagrim have the right to lodge an application with the Administrative Appeals Tribunal for a review of ASIC’s decisions.
This follows the guilty plea of Mr Shawn Richard to two charges of dishonest conduct in relation to his role as a director of the investment manager of the Astarra Strategic Fund. Mr Richard is currently on bail awaiting sentence.
It also follows the enforceable undertaking from former Trio directors Mr Phillpott and Ms Beck, who will be prevented from working in the financial services industry for 15 years and two years respectively.
Finally, it follows the enforceable undertaking from financial planner Kilara Financial Solutions Pty Ltd (Kilara), who recommended retail investors switch their superannuation holding into a fund of which Trio was the responsible entity.