The Australian Securities and Investment Commission (ASIC) has completed a number of enforcement actions against current and former advisers resulting in two being banned and two pleading guilty to a range of offences.
Advisers banned for poor conduct and lack of competence
The corporate regulator banned Ben Cheung of Epping, NSW, from providing financial services for ten years after it found he engaged in misleading and deceptive conduct.
Cheung was an authorised representative of Australia New Zealand Banking Group (ANZ) at the time of the misconduct which took place between April 2013 and March 2014.
During this period ASIC found that Cheung engaged in the misleading and deceptive conduct by forging signatures of clients on statements of advice, investment instruction forms and an investment withdrawal form as well as creating false bank documents and related advice documents.
ASIC has also banned Ben Rickman, of Point Cook, Victoria, from providing financial services for three years after he was found to not be adequately trained or competent to provide financial services.
Rickman was employed by Macquarie Equities Limited (MEL) from July 2012 to June 2014 and ASIC found during this time he provided advice which involved the drafting of legal documents and provided of legal advice about those documents.
Rickman also made representation that he was a “solicitor/conveyancer” in a property purchase transaction but has no legal qualifications and was not licensed as a conveyancer.
ASIC said Rickman had shown a lack of understanding regarding the role of a financial adviser and the poor results of files reviews carried about by Macquarie and his acting outside the scope of representative authority demonstrated he did not have ability, professional skills or judgement to competently provide financial services.
Both bannings are a result of ASIC’s Wealth Management Project which is examining the conduct of the financial advice firms within NAB, Westpac, CBA, ANZ, AMP and Macquarie Bank.
Cheung and Rickman have both appealed to the Administrative Appeals Tribunal for a review of ASIC’s decision.
Advisers plead guilty to charges of dishonesty and fraud
ASIC has also acted against two former advisers with investigations leading to court action and the advisers pleading guilty.
In the first of these actions the former owner of Financial Planning Services (Australia), Darren Wise of Rhodes, New South Wales, pleaded guilty to three charges of dishonestly gaining a benefit, the making of false documents, and use of false documents involving over $1 million of his clients’ assets.
Wise pleaded guilty to the three charges in the Maroochydore Magistrates Court following an ASIC investigation after which he admitted that between 23 October 1997 and 10 March 2006 he created six applications for margin loans which falsely stated that clients had agreed to act as guarantors for the margin loans.
He also admitted he provided the false margin lending applications with the intention of fraudulently inducing the lender to provide him margin loans; and on 67 separate occasions dishonestly gained a benefit for himself by lodging securities owned by five clients as collateral for the margin loans without the clients’ authorisation.
ASIC stated the conduct occurred while Wise was a financial adviser with Financial Planning Services (Australia), which he owned from 5 September 2000 until he sold it on 9 May 2008, and resulted in him dishonestly obtaining $1.07 million which he used for his own purposes.
The Commonwealth Director of Public Prosecutions is prosecuting the matter and Wise was granted bail and will return to court at a later date.
The second action has resulted in former employee of Patersons Securities Limited, Thanh Tu, formerly of Forestdale, Brisbane being sentenced to nine-and-a-half years imprisonment.
Tu had, in November 2015, already pleaded guilty to 33 counts of fraud and 21 counts of fraudulent falsification of records and was remanded in custody at that time.
Tu was made eligible for parole after serving three years, taking into account time already served in custody and was permanently banned from providing financial services in July 2014.
The sentencing, in the Brisbane District Court, followed an ASIC investigation leading the regulator to allege that between September 2008 and September 2013 Tu, while employed by Patersons, dishonestly induced 18 separate individual investors to invest approximately $9 million.
ASIC also alleged he misled investors and provided some with false Certificates of Investment in the fictitious Paterson Securities and redirected the funds into a personal trading account held by Tu with another organisation.
These funds were traded by Tu, for his own purposes, resulting in the loss of $8.12 million of the original capital invested and the recovery of only $959,000.
ASIC stated Tu also made false interest payments to some clients using funds provided by other clients and provided clients with a range of false documents to conceal his activities.
These activities were initially reported by Patersons to ASIC and the company assisted ASIC during its investigation into Tu who was employed from September 2008 as a private client adviser until his termination in September 2013.
