legal action

ASIC Bans Two Melbourne Men for Breaches of Best Interests Duty

ASIC has banned Mr Adrian Chenh and Mr Bill El-Helou from providing financial services for a period of five years each following an ASIC investigation.

ASIC’s investigation found that Mr Chenh and Mr El-Helou provided advice to clients that was in breach of the best interests duty introduced under the Future of Financial Advice (FOFA) reforms.

Former Wyndham Vacation Resorts Consultant, Mr Cymon Fontaine, Jailed for Defrauding Clients

Wyndham

Following an ASIC investigation, Mr Cymon Fontaine has been sentenced to four years' imprisonment in the Southport District Court for seven charges of fraud. 

Mr Fontaine pleaded guilty to defrauding six clients for a total of $105,910.10 and caused a loss of $4500 to another client.

Between 28 June 2011 and 1 July 2013, Mr Fontaine was an authorised representative and Corporate Upgrades Consultant for Wyndham Vacation Resorts South Pacific Limited (Wyndham), a financial services company selling time share interests in resorts and hotels.

Between April 2013 and October 2013, Mr Fontaine exploited the credibility and contacts gained from his position as a Corporate Upgrades Consultant to contact existing clients. He then offered to assist them with upgrades and the purchase of secondhand credits at a cheaper rate than that being offered by Wyndham.

Mr Fontaine used these funds for his own purposes, never purchasing the agreed secondhand credits for the clients. Once discovered, Wyndham terminated Mr Fontaine's employment on 1 July 2013. However, Mr Fontaine continued to defraud some clients after his employment was terminated.

ASIC Deputy Chair Peter Kell said, 'This kind of dishonesty is not tolerated by ASIC or the community.'

This matter was prosecuted by the Commonwealth Director of Public Prosecutions.

Background

Mr Fontaine was charged under sections 408C(1)(d) and 408C(1)(e) of the Criminal Code 1899 (Qld).

Wyndham is a developer and marketer of flexible, points-based holiday ownership products. Clients buy into different levels of memberships with Wyndham by buying 'points' or 'credits' from Wyndham. Depending on a client's level of membership (determined by the number of credits the client has) they are allowed different levels of privileges and benefits, including using their credits to stay at Wyndham's resorts and hotels or partner resorts or hotels.

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ASIC permanently bans former Melbourne insurance broker Mr Anthony Doring, from providing financial services

Financial adviser

ASIC has permanently banned Mr Anthony Doring of Melbourne, Victoria, from providing financial services. Between 2009 and October 2015, Mr Doring was a manager of Phil Doring Insurance Brokers (PDIB), which provided insurance services and which had offices in Mackay and Melbourne.

ASIC has permanently banned Mr Anthony Doring of Melbourne, Victoria, from providing financial services. Between 2009 and October 2015, Mr Doring was a manager of Phil Doring Insurance Brokers (PDIB), which provided insurance services and which had offices in Mackay and Melbourne.

Following a hearing, ASIC found that Mr Doring had:

  • failed to ensure that PDIB operated pursuant to an Australian financial services (AFS) licence when providing financial services;
  • deliberately engaged in dishonest conduct by misappropriating money from the PDIB trust account, and using this to enable PDIB to continue trading;
  • cancelled client insurance policies without authorisation; and
  • failed to comply with the requirement that a person who is licenced with an AFS license lodge an annual auditor's report and financial statements with ASIC. 

In addition, Mr Doring was made bankrupt on 19 July 2016.

ASIC Deputy Chairman Peter Kell said, 'The investing public needs to be able to trust those who provide financial services.'

'ASIC will act to remove those who behave without regard to their obligations to their clients from the financial services industry.'

Mr Doring's banning will be recorded on ASIC's register of financial advisers.

Mr Doring has a right of appeal to the Administrative Appeals Tribunal.

Background

Mr Doring failed to obtain an AFS licence for the PDIB business following the death of his father, Phillip Doring, in April 2013. Phillip Doring had held an AFS licence in his personal capacity.

In October 2015, Steadfast Group Limited, a dealer group of which PDIB was a member, reported its concerns to ASIC regarding the conduct of Mr Doring and the existence of an apparent shortfall in the PDIB trust account of between $700,000 and $1.1 million.

PDIB was placed into liquidation on 18 April 2016 with Peter Gountzos of SV Partners appointed as liquidator.

16-392MR ASIC bans former Sentinel Private Wealth adviser for five years

ASIC has banned Stephen Michael Beckton, a financial adviser and former authorised representative of Sentinel Private Wealth Pty Ltd (Sentinel), from providing financial services for five years.

ASIC found Mr Beckton did not comply with financial services laws on a number of occasions.

An ASIC review of Mr Beckton's advice found that he had recommended clients change superannuation and insurance products in circumstances where there was little benefit, but significant cost, to the client in changing. This advice benefited Mr Beckton through increased adviser fees and commissions he received from insurers. In doing so, Mr Beckton:

  • failed to act in the best interests of his clients, by:
    • failing to conduct a reasonable investigation of their existing superannuation and insurance products; and
    • giving them advice that may have left them in a worse position than if they had not followed his advice;
  • failed to provide appropriate advice to his clients;
  • failed to accurately disclose the fees associated with his advice; and
  • failed to put the interests of his clients ahead of his own, when he knew that there was a conflict of interest.

ASIC Deputy Chair Peter Kell said, 'Financial advisers must put their clients' interests ahead of their own. Super switching that provides little benefit to the client but is very profitable to advisers is clearly unacceptable.'

Mr Beckton's banning will be recorded on ASIC's register of financial advisers.

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

Background

Mr Beckton was a representative of Sentinel from September 2013 to October 2016.

ASIC published Information Sheet 182 (INFO 182) in August 2013. INFO 182 provides information and compliance tips for financial advisers who provide super switching advice.

16-139MR ASIC bans former employee of financial services business

ASIC has permanently banned former AFS licensee employee Mr Nicolai D'Lamartin, of Rosebery NSW, from providing financial services.

In 2014 Mr D'Lamartin was convicted of numerous counts of fraud and related offences under the Crimes Act 1900 (NSW), including impersonating persons and creating and using false documents to gain a financial advantage, larceny and using and possessing other people's identification information.

ASIC Deputy Chair Peter Kell said: 'Banning unscrupulous operators like Mr D'Lamartin will ensure consumers can have trust and confidence in the financial services industry.'

Mr D'Lamartin's convictions came to ASIC's attention in the course of investigating the conduct of an AFSL holder in late 2015. He has the right to appeal to the Administrative Appeals Tribunal (AAT) for a review of ASIC’s decision.

Background

On 27 February 2014 Mr D'Lamartin was convicted of the following:

  • 3 charges of fraud under s192E(1)(a) of the Crimes Act whereby he impersonated another person to dishonestly obtain property belonging to another;
  • 17 charges of fraud under s192E(1)(b) of the Crimes Act which included conduct where he impersonated another person to dishonestly obtain a financial advantage, or engaged in the unauthorised use of cheques, online bank accounts or credit cards to obtain a financial advantage;
  • 2 charges of forgery under s253 of the Crimes Act whereby he falsified bank document and other documents in the names of others, with the intention of having someone else accept them as genuine;
  • 1 charge of forgery under s254 of the Crimes Act whereby he used false documents to obtain bank cheques from bank accounts of others;
  • 3 charges of larceny under s117 of the Crimes Act whereby he stole cash and property, including drivers licenses and credit cards, from others;
  • 2 charges of dealing with identification information under s192J of the Crimes Act whereby he used identification information belonging to two people with the intention of committing fraud;
  • 2 charges of possession of identification information under s192K of the Crimes Act whereby he possessed identification information such as drivers licences, credit cards and Medicare cards with the intention of committing fraud; and
  • 1 charge of dealing with property suspected of being proceeds of crime under s193C of the Crimes Act.

Mr D'Lamartin was sentenced to an aggregate term of imprisonment of 3 years which commenced on 21 November 2012 with a non-parole period of 20 months.

16-388MR Former financial adviser jailed for forgery and misuse of client assets

Former financial adviser, Mr Darren John Wise, has been sentenced in the Maroochydore District Court to seven years imprisonment on charges brought by ASIC. Mr Wise will be eligible for parole after serving 20 months.

Mr Wise, formerly of Rhodes NSW, had earlier pleaded guilty to one count each of forgery, using forged documents and fraud.

The charges related to Mr Wise's conduct between 23 October 1997 and 10 March 2006, when, as a financial adviser at Kawana Waters in Queensland, he:

  • created six applications for margin loans on which he forged eight of his clients' signatures, the effect of which was to represent that the clients had agreed to act as guarantors for the margin loans;
  • used the false margin lending applications with the intention of fraudulently inducing the lender to provide him margin loans; and
  • on 67 separate occasions gained a benefit for himself by fraudulently lodging securities owned by clients as collateral for the margin loans without the clients' authorisation.

Mr Wise dishonestly obtained a total of $1,070,700 under the margin loans as a result of his misapplication of client assets. Mr Wise used the money for his own purposes including trading in securities on the ASX for himself, paying for losses in other trading accounts he held, and paying off personal debts.

ASIC Commissioner Greg Tanzer said, 'Mr Wise repeatedly engaged in dishonest conduct, putting his own interests ahead of his clients. This type of conduct undermines trust and confidence in the financial advice industry and will not be tolerated by ASIC or the broader community. We will act to ensure financial advisers who act dishonestly are held to account for their actions'.

Mr Wise was sentenced on 14 November 2016.

The Commonwealth Director of Public Prosecutions prosecuted the matter.

Background

In February 2016, ASIC permanently banned Mr Wise from providing financial services (refer: 16-032MR).

 
ASIC
 

16-163MR Former Perth financial planner permanently banned from financial services industry

ASIC has permanently banned a former Perth-based financial planner, Mr Tak Simson Kwok, from the financial services industry.

Mr Kwok was employed as a financial planner by HSBC Bank Australia Ltd (HSBC) from 29 September 2009 to 16 December 2013.

His responsibilities included providing financial advice to HSBC customers in respect of investments in HSBC-approved products (HSBC AP).

An ASIC investigation found that between April 2013 to December 2013, Mr Kwok engaged in not only misleading and deceptive but also dishonest conduct in relation to client funds and investments.

In particular, ASIC found that Mr Kwok:

  • misled and deceived four individual clients into investing a total of $1,975,000 that they falsely believed had been placed into a HSBC AP
  • misled and deceived a further two individual clients into investing or reinvesting a total of $2,295,000 into what the clients falsely believed was a HSBC AP Annuity investment
  • engaged in conduct that was dishonest, including forging documents and signatures to disguise the fact that client money had not been invested into a HSBC AP; and
  • misled and deceived HSBC into erroneously believing he was only providing recommendations to the clients about products on the HSBC AP list and in accordance with HSBC policies.

ASIC Commissioner John Price said, 'ASIC will act to remove those financial advisers from the industry who engage in dishonest conduct'.

In permanently banning Mr Kwok, ASIC found reason to believe that he was not of good fame or character.

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

Mr Kwok is the 51st individual to be banned by ASIC from providing financial services since 1 July 2015, of which 26 have been permanently banned.

Background

ASIC's investigation into Mr Kwok's conduct followed notification by HSBC.

As a result of Mr Kwok's conduct, HSBC initiated court actions resulting in full remediation to all of the affected clients.

Regulatory Guide 78 Breach reporting by AFS licensees (RG 78) provides guidance for financial services licensees on reporting breaches, or likely breaches, of their obligations under the financial services laws.

 
Financial Planning
 

16-368MR ASIC permanently bans former financial adviser Ashley Howard

ASIC has permanently banned former NSW financial adviser Mr Ashley Grant Howard from providing financial services after an investigation found he had:  

  • engaged in dishonest conduct; 
  • held out that trading he was conducting was authorised; 
  • provided financial services when not licensed or authorised to do so; and  
  • engaged in conduct that was likely to mislead. 

ASIC found that Mr Howard had failed to comply with the Corporations Act in that he: 

  • used more than $1.8 million of client funds for his own benefit or the benefit of others (which included paying for cosmetic surgery for his partner, purchasing a house and settling debts to Jordan Belfort, the so-called 'Wolf of Wall Street'); and 
  • provided false information and documents to clients and third parties. 

ASIC also found that Mr Howard had failed to: 

  • assist his trustee in bankruptcy by not lodging a statement of affairs; 
  • assist the liquidator of Meridien Capital Ltd, a company of which he was a director, by not providing a report as to the company's affairs, not providing information as reasonably required and directed by the liquidator and did not produce the books and records of the company; 
  • comply with Notices served by ASIC to produce documents and attend an examination. 

Mr Howard's dishonest unauthorised use of the $1.8 million from clients led to ASIC finding that he was not of good fame and character. 

ASIC Commissioner John Price said, 'ASIC will take action to remove persons from the financial services industry to protect the public. Mr Howard's conduct was particularly bad in that, on occasions, he preyed on elderly and vulnerable people.' 

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

Background 

In 2014 ASIC commenced an investigation into the circumstances surrounding the misappropriation of funds from the initial public offering for Elsmore Resources Limited [ASX code: ELR] ('Elsmore'). Elsmore listed on the ASX on 20 December 2013 at a time when Mr Howard was a director. 

During the course of this investigation ASIC became concerned about the conduct of various individuals, including Mr Howard's, and which has led to his permanent banning from providing financial services.  

Mr Shaun Morgan, a New Zealand national, also came to ASIC's attention during the investigation and led ASIC to issue a public warning notice about Mr Morgan and his companies (15-016MR). Subsequently last year ASIC permanently banned Mr Morgan from providing financial services (15-140MR) and he was removed as a director from various Australian companies in light of his criminal conviction in the United States (15-275MR). 

Elsmore itself has pursued legal action to recover the allegedly misappropriated funds from Mr Howard and his associates, Periwinkle Investments Pty Ltd, HF Global Corporate Financial and Harry Fung. Mr Howard is currently a bankrupt, which has impacted on the ability of the company to enforce a settlement agreement entered into with Mr Howard requiring him to repay the misappropriated funds. Most recently the Supreme Court of New South Wales ordered Mr Fung to pay approximately $680,000 to the company. 

Elsmore Resources Limited was delisted by the ASX on 15 August 2016. 

ASIC's investigations into Mr Howard and other associated individuals continue.