Roy Keenan from Yarra Capital Management shares insights with James Dunn from The Inside Network on the role of active management. The Inside Adviser
After the Hayne Royal Commission many advisers decided to steer away from large dealer groups in favour of becoming self-licensed. In the last six months, however, that trend has taken an abrupt turn.
Insider trading, market manipulation and cyber security lead ASIC action
The corporate regulator has released its enforcement and regulatory update for 1 April to 30 June 2022, during which it launched a series of litigations targeting misconduct. This was particularly focused on areas and issues where Australian consumers were misled or charged excessive fees.
The regulator also took action against insider trading and market manipulation in a bid to maintain trust and integrity in the financial system, with a particular focus on the ‘pump and dump’ strategies that occurred during the pandemic.
One of the key outcomes for the quarter was the Federal Court’s decision to prosecute Westpac Banking Corportation and issue a $113m fine, for widespread compliance failures. Uncovered during the Banking Royal Commission, Westpac was charging fees to 11,800 deceased customers. According to the Australian Financial Review, Westpac also charged fees for no service, $10.9 million in advice fees to 11,800 deceased customers as well as penalties for inadequate fee disclosure to 24,000 clients.
Another high-profile case was with Melbourne-based cryptocurrency lender Helio Lending, which promoted and falsely claimed that the firm held an Australian credit licence. The maximum penalty for a breach of the Natural Consumer Credit Protection Act is $252,000.
ASIC also took action against an advice entity for failing to adequately manage cyber-security which is one of the regulator’s core priorities.
In total, there were 25 individuals charged in criminal proceedings and 132 criminal charges laid. It included seven custodial sentences and ten non-custodial sentences. In total there were 81 defendants prosecuted for strict liability offences and 171 criminal charges laid in summary prosecutions for strict liability offences. 31 individuals were removed or restricted from providing financial services or credit and 26 individuals were disqualified or removed from directing companies. And finally, two infringement notices have been issued and 148 investigations are still ongoing.
But it wasn’t all bad news. During the quarter, ASIC issued guidance for superannuation and investment funds on avoiding greenwashing in a bid to implement new responsibilities under the Better Advice Act and provide some guardrails for the booming sector.
