16-377MR ASIC permanently bans Brisbane financial adviser

ASIC has permanently banned Mr George Karakatsanis, of Yeronga, Queensland from providing any financial services.  ASIC found that he engaged in conduct that was misleading and deceptive whilst recommending clients invest in unsecured fixed interest notes in Protect Ensure. ASIC also found he failed to comply with financial services laws.

Mr Karakatsanis has been an authorised representative of various Australian Financial Services Licencees since 2003.  Between 16 July 2012 to 22 May 2014 Mr Karkatsanis was an Authorised Representative of Protect Ensure Pty Ltd.  

ASIC found that Mr Karakatsanis:

  • engaged in conduct that was false and misleading by making false statements about the features of financial products that were likely to induce clients to acquire the products;
  • deliberately misled clients so that they did not understand the basic features of the financial products he was recommending they invest in;
  • engaged in misleading and deceptive conduct by failing to properly disclose that investor funds were being invested in Protect Ensure and thus constituting a direct conflict of interest;
  • failed to act in his clients' best interests by failing to disclosure this conflict of interest;
  • failed to act in his clients' best interests by ignoring their circumstances, objectives, financial situations and needs when recommending they invest in Protect Ensure;
  • failed to give provide appropriate advice; and
  • failed to provide Statements of Advice.

Subsequently, partly due to Mr Karakatsanis' conduct, clients' funds were used improperly, such as to pay Protect Ensure's business related expenses. As a result, some investors lost their invested funds entirely.

ASIC has determined that Mr Karakatsanis is not of good fame and character, making him an unsuitable person to provide financial services. 

'Mr Karakatsanis's conduct falls far short of the high standards expected of those in the financial services industry. ASIC will continue to protect consumers from advisors who engage in misleading conduct and place their interests above those of their client.'  ASIC Deputy Chairman Peter Kell said.

Mr Karakatsanis has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC's decision.

Background

On 15 December 2014, ASIC cancelled the AFS Licence of Protect Ensure as a result of Protect Ensure not having adequate financial resources to provide the services covered by the Licence and to carry out supervisory arrangements as required by s912A(1)(d) of the Corporations Act. (refer: 14-338MR).

Protect Ensure was placed into liquidation on 12 June 2015.

On 30 June 2015, ASIC permanently banned Mr Lee Robert Robin, of Camp Hill, Queensland from providing any financial services.  ASIC found that he engaged in conduct that was misleading or deceptive whilst issuing unsecured fixed interest notes in Protect Ensure. (refer: 15-161MR).

 
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