ASIC roundup: Prison for insider trading, and first win on greenwashing civil penalty action

The Australian Securities & Investments Commission’s latest actions and news, March 25 – 28, 2024.

Crown Wealth Group AFS licence cancelled – March 28, 2024

The Australian financial services licence has been cancelled of Crown Wealth Group Pty Ltd because the company has been placed into voluntary administration.

Director failing to have a director identification number – March 25, 2024

A first-ever prosecution action has commenced against a director who failed to have a required director identification number.

The director was charged with one count of breaching section 1272C(1) of the Corporations Act 2001, and is facing a maximum penalty of A$13,320 ($8,699).

Court updates

ASIC wins first greenwashing civil penalty action against Vanguard – March 28, 2024

Vanguard Investments Australia has been found by the Federal Court to have made misleading claims about certain environmental, social and governance (ESG) exclusionary screens regarding investments in a Vanguard index fund.

Vanguard also admitted at a hearing to have been engaging in “conduct that was liable to mislead the public”, and to have been making false or misleading representations.

The company was found to have contravened the ASIC Act multiple times through its misleading ESG representations to the Vanguard Ethically Conscious Global Aggregate Bond Index Fund, which included:

  • 12 product disclosure statements;
  • a media release;
  • statements published on Vanguard’s website;
  • a Finance News Network interview on YouTube; and
  • a presentation at a Finance News Network Fund Manager Event which was published online.

“Vanguard promised its investors and potential investors that the product would be screened to exclude bond issuers with significant business activities in certain industries, including fossil fuels, when this was not always the case.”

Sarah Court, Deputy Chair, ASIC

Janet Cameron convicted and fined – March 28, 2024

Janet Heather Cameron, former director of Bellamy’s Australia Ltd, has been convicted and ordered to pay fines totalling A$8,000 ($5,193) by the Hobart Magistrates Court.

In December 2023, Cameron was found guilty of one count of failing to lodge a substantial holder notice regarding her interests in Bellamy’s, and one count of making a false and or misleading statement in a Notice of Initial Substantial Holder to the Commission.

She was convicted of both charges, with fines of A$3,000 ($1,957) and A$5,000 ($3,261) respectively. She has also automatically been disqualified from managing corporations for five years.

Waugh sentenced to imprisonment for insider trading – March 27, 2024

Cameron Kerr Waugh, former corporate adviser, has been sentenced to two years imprisonment for insider trading, with release after nine months, upon entry into a recognisance to be of good behaviour for 15 months. He was found contravening section 1043A(1) of the Corporations Act 2001, regarding his trading in Genesis Minerals Limited shares in September 2021.

In January, Waugh pleaded guilty to acquiring 747,626 shares in Genesis when he learned about a funding proposal that included a multi-million share placement, and a restructure of the board to include Raleigh Finlayson and Neville Power.

When he sold the shares in November 2021, Waugh made a profit of A$57,256.44 ($37,370).

With his conviction, he is also automatically disqualified from managing corporations for five years.

ASIC news week 13

Legislative instruments

Five class orders for managed funds that were due to expire on April 1, 2024, have been remade by ASIC, which include changing:  

  • [CO 13/1200] – Periodic statements relief for AQUA quoted and listed managed investment scheme managed investment scheme issuer –> ASIC Corporations (Periodic Statement Relief for Quoted Securities) Instrument 2024/14;
  • [CO 13/1406] – Land holding for primary production schemes –>ASIC Corporations (Land Holding for Primary Production Schemes) Instrument 2024/15;
  • [CO 13/1409] – Holding assets: Standards for responsible entities –> ASIC Corporations (Asset Holding Standards for Responsible Entities) Instrument 2024/16;
  • [CO 13/1410] – Holding assets: Standards for providers of custodial and depository services –> ASIC Corporations (Custody Standards for Providers of Custodial and Depository Services) Instrument 2024/17; and
  • [CO 13/1621] – Exemption and declaration for the operation of mFund –> ASIC Corporations (mFund) Instrument 2024/18.

All new instruments will sunset on April 1, 2029 except Instrument 2024/15, which expires on 1 October 1, 2024.

ASIC has also extended the operation of the parent entity financial reporting and auditor independence legislative instruments.

Both ASIC Corporations (Parent Entity Financial Statements) Instrument 2021/195 and ASIC Corporations (Auditor Independence) Instrument 2021/75 were both due to expire in April 2024, yet, the issued ASIC Corporations (Amendment) Instrument 2024/187 will extend the relief for an additional five years.