code of ethics

Gold Coast director and property developer sentenced to eight years’ imprisonment

Gold Coast director and property developer sentenced to eight years’ imprisonment

“Owing investors approximately $9 million (17-246MR). Many of the investors were pensioners and were approached by telemarketing or word of mouth. Investors were convinced to borrow against their homes and were told that their money would be used to develop property in Tasmania. Instead, the money paid by investors was used to pay back interest owed to other investors, payments to employees, cash withdrawals and transfers to personal bank accounts.”

16-429MR ASIC bans life insurance financial adviser for seven years

ASIC has banned life insurance financial adviser Mr Mateen Mohammed, of Calamvale, Queensland, from providing financial services for seven years.

ASIC’s action against Mr Mohammed, a former authorised representative of Synchronised Business Services Pty Ltd, is part of ongoing enforcement and regulatory action following ASIC’s review of life insurance advice.

As a result of ASIC's surveillance, it was found that Mr Mohammed:

  • had not maintained the high standards expected of a provider of financial services;
  • did not understand the duties and obligations imposed on a provider of financial services; and
  • could not be relied upon to discharge the duties and obligations imposed on a provider of financial services.

In particular, it was found that Mr Mohammed did not act in the best interests of his clients in that he failed to:

  • make reasonable enquires into clients' relevant objectives, financial situation and needs;
  • conduct a reasonable investigation into financial products that might achieve the objectives of the clients, including their existing superannuation and insurance products; and
  • prioritise the interests of his clients over his own.

ASIC also found that he had submitted an insurance application without his client's knowledge and as a result had misled or deceived the insurer as to his authority to do so.

ASIC Deputy Chairman Peter Kell said, 'Any advice to switch existing life insurance and superannuation products must be in the client's best interest. Where there is nothing in the client’s relevant circumstances to indicate that the switch would be beneficial, ASIC will conclude that the client is not in a better position.'  

Mr Mohammed was an authorised representative of Synchronised Business Services Pty Ltd during the relevant period, from 1 July 2010 to 22 April 2015.

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

Background

Outcomes following ASIC’s review of life insurance advice include:

  • in May 2016, ASIC accepted an enforceable undertaking from Michael Melamed, a former authorised representative of Synchronised Business Service Pty Ltd (refer:16-147MR)
  • in February 2016, ASIC permanently banned life insurance financial adviser Andrew Moroney (refer: 16-036MR)
  • in January 2016, ASIC accepted an enforceable undertaking from Clearview Financial Advice Pty Ltd representative, Jason Churchill (refer:16-008MR);
  • in September 2015, ASIC banned life insurance financial adviser and former authorised representative Lukas Zelka of Neo Financial Solutions Pty Ltd from providing financial services for three years (refer: 15-269MR);
  • in July 2015, ASIC banned life insurance financial adviser Brian Farber from providing financial services for four years (refer: 15-178MR);
  • in January 2015, ASIC imposed conditions on the Australian financial services (AFS) licence of Suncorp-owned Guardian Advice (refer: 15-003MR).

16-135MR South Australian director charged with misappropriating $1.8 million in SMSF property investments

Following an ASIC investigation, Mr George John Nowak has appeared in the Adelaide Magistrates Court charged with thirty one counts of deception and one count of dishonest dealings with documents.

ASIC investigated Mr Nowak's conduct in dealing with members of self-managed superannuation funds (SMSFs) who were undertaking property purchases offered by companies of which he was a director, including EJ Property Developments Pty Ltd. It is alleged that Mr Nowak misappropriated $1.8 million in SMSF monies by not holding funds in a designated account and by not applying those funds towards the intended property purchase.

Mr Nowak was not required to enter a plea and was granted conditional bail. The matter is listed for return at the Adelaide Magistrates Court on 12 July 2016. 

The Commonwealth Director of Public Prosecutions is prosecuting these matters.

Background

The charges of deception contrary to section 139(b) of the SA Criminal Law Consolidation Act 1935 each carry a maximum penalty of ten years imprisonment.

The charge of dishonest dealings with documents contrary to section 140 of the SA Criminal Law Consolidation Act 1935 carries a maximum penalty of ten years imprisonment.

Previous media releases in relation to this matter incude 14-024MR and 15-048MR.

In 2012 in response to the growth in SMSFs, ASIC established the SMSF Taskforce. The Taskforce continues to meet regularly to examine high-risk and emerging SMSF issues such as property spruiking to SMSFs, unlicensed conduct and false and misleading advertising of SMSFs. 

Outcomes and actions stemming from the SMSF Taskforce include:

  • ASIC accepted an enforceable undertaking (EU) from CMH Financial Group Pty Ltd and the sole director, Daniel White, after an ASIC surveillance found CMH had failed to provide advice about self-managed superannuation funds that was appropriate and in the best interests of clients (refer 16-097MR);
  • Ms Sarah Jane Busteed was charged with three counts of dishonestly obtaining a financial advantage by deception and one count of dealing with over $100,000 that was the proceeds of crime (refer: 16-040MR);
  • Superannuation Warehouse Australia Pty Ltd was ordered to pay a penalty of $25,000 for false and misleading“Free SMSF Setup” advertising (refer: 15-332MR).
  • The Supreme Court of NSW found Park Trent Properties Group Pty Ltd had been unlawfully carrying on a financial services business for over 5 years by providing advice to clients to purchase investment properties through a SMSF (refer: 15-300MR).
  • Dixon Advisory Group Limited complied with two ASIC infringement notices, paying two $10,200 penalties after including potentially misleading claims on its website (refer: 15-207MR).
  • The credit licence of Queensland-based Smithson & Baye was cancelled following an investigation into a property and SMSF promoting group (refer: 15-228MR)
  • ASIC released two information sheets to improve the quality of advice provided by advisers onSMSFs: Information Sheet 205 Advice on self-managed superannuation funds: Disclosure of risks(INFO 205) and Information Sheet 206 Advice on self-managed superannuation funds: Disclosure of costs (INFO 206) (refer 15-192MR).
  • Omniwealth Services paid a $10,200 penalty for potentially misleading claims on its website (refer: 15-190MR).
  • The principal of Sherwin Financial Planners, Bradley Thomas Sherwin, was charged with fraud. The charges relate to the use of SMSFs of former clients of Sherwin Financial Planners (refer: 15-158MR).
  • The Federal Court of Australia ruled that Craig Gore and several other parties and financial services businesses, including Queensland-based ActiveSuper and Royale Capital, contravened sections of the Corporations Act or were knowingly concerned in those contraventions. (refer: 15-134MR)
  • Australian Financial Planning Solutions Pty Ltd paid $10,200 in penalties for potentially misleading SMSF ads (refer: 15-052MR).
  • ASIC banned the founder of the Charterhill Group of Companies, George Nowak, from providing financial services until 3 July 2017 on the basis that Mr Nowak is an undischarged bankrupt (refer: 15-048MR).
  • Interprac Financial Planning agreed to address ASIC concerns relating to advice provided to some clients about SMSFs (refer: 14-258MR).
  • Sentry Financial Services agreed to address ASIC concerns about SMSF advice provided to clients (refer: 14-109MR).
  • SuperHelp Australia paid a $10,200 penalty after making potentially misleading statements about the cost of setting up SMSF (refer: 14-051MR).
  • Media Super paid $10,200 in penalties for potentially misleading SMSF ads (refer: 14-001MR).
  • Spring Financial Group entered into an enforceable undertaking following ASIC concerns about the level of monitoring and supervision of its representatives (refer: 13-263MR).
  • Anne Street Partners agreed to engage an independent expert following ASIC concerns about SMSF advice provided to clients (refer: 13-248MR).
  • We published Report 337 Improving the quality of advice given to SMSF investors. (refer: 13-081MR).

SMSFs will continue to be a focus in ASICs enforcement work.

Editor's note 1:

On 12 July 2016, declarations were filed at the Adelaide Magistrates Court. The matter was listed for return on 22 September 2016 in the Adelaide Magistrates Court for Mr Nowak to enter a plea.

Editor's note 2:

On 22 September 2016, the matter was adjourned until 13 October 2016.

Editor's note 3:

On 13 October 2016, the matter was adjourned until 10 November 2016.

Editor's note 4:

The matter has been further adjourned until 19 January 2017.

16-363MR ASIC disqualifies SMSF auditor

ASIC has disqualified Pierre Jarjoura of New South Wales from being an approved self-managed superannuation fund (SMSF) auditor. ASIC determined that Mr Jarjoura had breached independence and audit requirements and was not a fit and proper person to be an approved SMSF auditor. 

ASIC found that Mr Jarjoura had breached: 

  • Auditor independence requirements of APES 110 Code of Ethics for Professional Accountants, where he audited a fund of which he was a member and the trustee.  
  • Requirements of Australian auditing standards to adopt appropriate procedures for properly maintaining audit documentation. 

ASIC Commissioner John Price said, ‘SMSF auditors play a fundamental role in promoting confidence in the SMSF sector so it is crucial that they adhere to ethical and professional standards. ASIC will continue to take action where the conduct of SMSF auditors is inadequate.’ 

SMSF trustees and members can check whether their auditor is registered, or whether a person has been disqualified, by searching ASIC's SMSF auditor register at connectonline.asic.gov.au. 

Background 

Information about Mr Jarjoura was referred to ASIC by the Australian Taxation Office (ATO) under section 128P of the Superannuation Industry (Supervision) Act 1993 (the SIS Act). 

From 1 July 2013, the SIS Act required all auditors of SMSFs to be registered with ASIC. This was to ensure that all SMSF auditors meet the base standards of competency and expertise. 

ASIC and the ATO work closely together as co-regulators of SMSF auditors. The ATO monitors SMSF auditor conduct and may refer matters to ASIC for possible action such as disqualification or suspension of their registration.