ASIC roundup: JP Morgan Securities fined A$775,000, and false documents

The Australian Securities & Investments Commission’s latest actions and news, May 6 – 10, 2024.

Brett Paul Trevillian pleads guilty to falsifying documents – May 10, 2024

Brett Paul Trevillian, the director of Metal Alpha Pty Ltd, has pleaded guilty to forging portfolio performance verification reports when he worked as investment manager at AlphaThorn Pty Ltd (now Trading Life Services Pty Ltd).

During April to October 2019, Trevillian created four forged portfolio performance verification reports relating to of two of AlphaThorn’s investment products. The documents contained false history of investment returns by the company.

He pleaded guilty to:

  • two offences of making a false document with the intention to obtain a financial advantage;
  • one offence in respect of reports relating to the secured service product; and
  • the same regarding the enhanced service product.

A date for a sentencing hearing will be set later. Under section 253 of the Crimes Act 1900 (NSW), the maximum sentence for creating a false document to get a financial advantage is 10 years imprisonment.

JP Morgan Securities fined A$775,000 for market gatekeeper failure – May 9, 2024

JP Morgan Securities Australia Limited (JPMSAL) has been fined A$775,000 ($511,063) by the Markets Disciplinary Panel (MDP) for permitting suspicious client orders to be placed on the futures market, ASX 24.  

Following an ASIC investigation, the MDP found that JPMSAL should have suspected 36 client orders that were made between January 11 and March 3, 2022. The orders were regarding the Eastern Australia Wheat futures January 2023 (WMF3) contracts, and were found to have been “submitted with the intention of creating a false or misleading appearance with respect to the market for, or the price” of set contracts.

The MDP called JPMSAL’s failure to identify the suspicious trading “careless,” and said JPMSAL should have acted more expeditiously when ASIC alerted them.

According to the MDP, JPMSAL should have suspected the orders to be suspicious for numerous reasons, including:  

  • many orders were entered late in the trading session, including seconds before market close;
  • a large proportion were small volume orders, such as sizes of five or less;
  • some sell orders resulted or may have in a decrease to the daily settlement price of WMF3 contracts; and 
  • the orders were unusual in the market for WMF3 contracts when considering the history of, and other trading in that product.  

“There are real world consequences for this sort of behavior. Farmers use these contracts to manage wheat price fluctuations which can affect what Australians pay at the checkout.”

Sarah Court, Deputy Chair, ASIC

Directors convicted for failing to have director identification numbers – May 9, 2024

Luke David Mason and Alexander Henry have both been convicted and fined A$5,000 ($3,287) each for failures to comply with director identification requirements.

Mason, director of LDM (WA) Pty Ltd and LDM Corporate Enterprises Pty Ltd, was convicted ex-parte on May 3 for violating section 1272C(2) of the Corporations Act 2001 for failing to have a director identification number.

Henry, director of Global Material Solutions Australia Pty Ltd, Alex Henry Holdings Pty Ltd, Duke Shipping Containers Pty Ltd and AII Australia Pty Ltd, was also convicted ex-parte on May 3 for the same offence.

Frozen assets of Brisbane adviser – May 9, 2024

“Urgent proceedings” have commenced against Sunny Mahendra Prakash and his related companies Principal Financial Services Pty Ltd, Self-Managed Super Pty Ltd, Provest Enterprises Pty Ltd and Super Funds Australia Pty Ltd ITF Principal Superannuation Fund.

The Commission is currently investigating the businesses conducted from January 2016 by Prakash and the companies – such as financial advice and activities on client trading accounts.

On March 28, 2023, the Court made orders to preserve Prakash’s and the companies assets, plus restraining Prakash from leaving Australia.

On April 19, 2024, the parties consented to a variation to carve outs to the asset preservations orders.

A case management hearing is scheduled for May 16.

ASIC news week 19

Super trustees need to improve gatekeeping of member savings

Superannuation trustees need to renew efforts to protect members from “unscrupulous operators amid evidence of inadequate oversight of advice fee deductions,” ASIC says.

In a newly published report, the Commission found that issues regarding fee monitoring still pose risks and cause detriment to members.

“Despite repeated calls for an uplift in practices from ASIC and APRA in joint letters issued in 2019 and 2021, our latest review shows continued deficiencies in trustee oversight of advice fee deductions by some trustees,” ASIC Commissioner Simone Constant said.

With the concern about the potential impact on superannuation members, ASIC now urges superannuation trustees to reassess their oversight processes to strengthen member protection, and encourages them to:

  • review how financial advice documents are sampled to identify those who are providing harmful advice;
  • consider caps on advice fee deductions;
  • enhance adviser onboarding practices; and
  • regularly check for unexpected movements that might indicate a problem at ASIC’s Financial Adviser Register, and to maintain watchlists and monitoring patterns/irregularities in advice fee deductions, withdrawals of member consent and rollovers into the fund.​

New Australia and UK agreement on audit qualifications

Memorandum of Understanding (MoU) on Reciprocal Arrangements has been signed between ASIC and the UK Financial Reporting Council.

The MoU allows auditors in Australia and the UK to have their qualification and audit rights more easily recognized in the other country.

Consulting on updated guidance for carbon market participants

ASIC has proposed updates to its Regulatory Guide 236 Do I need an AFS licence to participate in carbon markets? to cover safeguard mechanism reforms and changes in the regulatory landscape for carbon markets.

Feedback can be submitted until June 3.

Warning over dodgy cold calling operators and online baiting tactics

The Commission has identified cold calling operators that are using high-pressure sales tactics, and is now warning consumers of online click-bait advertisements that lure people into receiving inappropriate pension switching advice – which often holds significant fees.

“Some of these cold-calling operators are pressuring consumers in critical retirement-saving years to move their savings when it is not in their best interests, putting them at risk of having less super as a result of inappropriate investments, fees and charges,” said Commissioner Alan Kirkland.