ASIC alleges bank subsidiary engaged in ‘serious misconduct’

The Australian Securities & Investments Commission (ASIC) has alleged that SGSAPL – which provides financial services to wholesale clients, including financial institutions, hedge funds, asset managers and various corporate clients in equity derivative sales – failed to comply with client money obligations on several occasions between December 2014 and September 2018, in contravention of criminal offence provisions under the Corporations Act 2001.

Under the act, an AFS license holder must ensure that client money is paid into a client money account. They are only permitted to make payments out of the account as specified by the Corporations Regulations.

ASIC alleges that SGSAPL failed to pay client money into segregated authorised bank accounts on two counts, and failed to comply with requirements relating to a client money bank account on another two counts.

“Client money provisions protect the interests of clients of Australian financial services licensees by separating client money from money belonging to licensees.

“Breaching client money provisions is serious misconduct and risks undermining investor confidence,” it said.

The maximum penalty for each of the charges is 250 penalty units, or approximately $45,000.

The Commonwealth Director of Public Prosecutions is prosecuting the matter, which has been adjourned for a case management hearing on 12 May 2020.

[Related: Volkswagen accused of breaching responsible lending laws]