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ASIC holds more wrongdoers to account

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The latest update from the Australian Securities and Investments Commission (ASIC) reveals progress in enforcement action in the first half, including significant civil penalties imposed against large financial institutions such as AMP.

AMP was ordered to pay a penalty of more than $5 million for failing to prevent life insurance “churn” by its financial planners.

ASIC says its Office of Enforcement also has a number of investigations into pandemic-related misconduct.

“We are pursuing our pandemic-related priorities by taking swift enforcement action in response to misconduct taking place in the midst of the pandemic, Deputy Chair Daniel Crennan said. “We have obtained urgent orders to protect vulnerable consumers during this trying time.”

During the first half ASIC successfully completed action in two long-running matters, Octaviar and Storm Financial, which resulted in civil penalties and disqualification orders.

The High Court upheld ASIC’s appeal in relation to civil penalty proceedings against officers and a fund manager of investment company MFS, also known as Octaviar, resulting in civil penalties totalling $1.89 million being imposed on five individuals, as well as substantial compensation orders and disqualification orders.

The Federal Court also confirmed an earlier decision that the directors of Townsville investment company Storm Financial had breached their directors’ duties resulting in civil penalties totalling $140,000. Each director was disqualified from managing corporations for seven years.

ASIC also had significant civil penalties imposed against large financial institutions including CBA, which was ordered to pay a civil penalty of $5 million and publish a corrective notice regarding its AgriAdvantage Plus Package.

Individual enforcement outcomes included:

  • Former Kleenmaid director Andrew Young sentenced to nine years’ imprisonment for fraud and insolvent trading
  • Company director George Nowak sentenced to ten years’ imprisonment for deception relating to his dealings with the assets of self-managed superannuation funds
  • Former Sirtex Medical CEO and director Gilman Wong sentenced for insider trading
  • Pre-insolvency adviser Stephen O’Neill sentenced to five years’ imprisonment for money laundering for his role in a scheme to remove the company assets of a company that subsequently went into liquidation.

ASIC has also commenced civil penalty proceedings against Colonial First State Investments Limited (CFSIL) over alleged misleading and deceptive statements made to members of its FirstChoice superannuation fund, and over alleged conflicted remuneration paid by CFSIL to CBA between 2013 and 2019.