misconduct

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.”

WARNING! Potential SMSF Investors At Risk

WARNING! Potential SMSF Investors At Risk

Self-Managed Super Fund (SMSF) investors need to be made aware of a scheme that is being promoted across the country. Investors are being advised to borrow to buy off-the-plan property, misleadingly offering high rewards and promising little to no risk.  For many, this has ended in unnecessary financial losses.

John Dimitropoulos permanently banned by ASIC from financial services and credit in connection with property and SMSF spruiking

John Dimitropoulos permanently banned by ASIC from financial services and credit in connection with property and SMSF spruiking

Mr Dimitropoulos' banning arises from ASIC's ongoing investigation into a property and self-managed superannuation fund (SMSF) promoting group, which includes the companies formerly called Heritage Financial Solutions Australia Pty Ltd (in liq) (Heritage Financial Solutions) and Sunpac Finance Pty Ltd (Sunpac Finance).

ASIC permanently bans Gold Coast financial adviser Mr Satvir Singh Birk

ASIC permanently bans Gold Coast financial adviser Mr Satvir Singh Birk

ASIC has permanently banned Gold Coast based financial adviser Mr Satvir Singh Birk from providing financial services.

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.

ASIC bans Financial Adviser, Mr Darren Tindall for five years

Financial Advice

ASIC has banned financial adviser, Mr Darren Tindall, of Orange, NSW, from providing financial services for five years after an investigation found he failed to comply with financial services laws. 

Mr Tindall was an authorised representative of Roan Financial Group Pty Ltd between 9 May 2013 and 19 May 2014, and was based in Orange, NSW. 

Mr Tindall was banned from providing financial services after ASIC found that he had: 

  • engaged in misleading and deceptive conduct on a client's behalf by failing to disclose their pre-existing medical conditions on an insurance application submitted to an insurer; 
  • engaged in dishonest conduct by not disclosing the medical conditions in transferring that insurance obtained to a new insurer; and  
  • recklessly made misleading comparisons about superannuation products to four clients, which induced those clients to switch their superannuation. 

ASIC Deputy Chair Peter Kell said, 'ASIC will take action against financial advisers who have been dishonest or who mislead their clients, in order to increase public confidence in the financial services industry.' 

On 17 January 2017, Mr Tindall applied to the Administrative Appeals Tribunal (AAT) for a stay of the banning and review of ASIC's decision. The stay application was heard on 27 January 2017. On 9 February 2017, the AAT refused the stay. The date for the hearing of review of ASIC's decision is yet to be set.

 

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.

16-163MR 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
 

16-377MR 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).

 
Financial Planner
 

16-358MR ASIC permanently bans Aussie Home Loans mortgage broker

Mr Bernard Meehan, a former mortgage broker for AHL Investments Pty Ltd (trading as Aussie Home Loans), has been permanently banned from engaging in credit activities by ASIC.

ASIC's investigation found that Mr Meehan had submitted payslips, document checklists and loan serviceability forms in nine home loan applications to Westpac Banking Group (Westpac) over a twelve month period from January 2014 to January 2015, that were false or materially misleading. Among the false documents were payslips that had not been issued by the purported employer. 

ASIC found that Mr Meehan's actions were wrong, inconsistent with a compliance mentality and showed a lacked of insight into what was required of a broker. Mr Meehan failed to adhere to proper procedures and did not accept wrongdoing or show appreciation of the fact that what he did involved failure to comply with credit legislation.

Aussie Home Loans reported the misconduct to ASIC.

ASIC's Deputy Chairman Peter Kell said, 'Gatekeepers, such as banks, aggregators and franchise groups have an important role to play in regulating the mortgage broking industry and act as a first line of defence to detect inappropriate practices and behaviour.'

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

Background

Since becoming the national regulator of consumer credit on 1 July 2010, ASIC has investigated in excess of 100 matters relating to loan fraud and has achieved many enforcement outcomes against the offenders. 

The outcomes range from undertakings by persons to voluntarily leave the industry to bans and prosecutions. To date, ASIC has banned 74 individuals or companies from providing credit services (including 32 permanent bans).

Through the Commonwealth Director of Public Prosecutions, ASIC has also brought criminal prosecutions against 14 credit service providers; with 12 having been convicted of fraud or dishonesty offences relating to the provision of false and misleading information/documents to lenders in client loan applications. 

Mr Meehan is the fourth Aussie Home Loans mortgage broker who has been permanently banned and/or convicted over the past 18 months for submitting false or misleading documents in loan applications. The other three mortgage brokers were:

  • Mr Madhvan Nair – convicted on eighteen charges involving the submission of false or misleading information to Westpac, National Australia Bank, and ANZ, see 16-219MR and 16-293MR.
  • Ms Emma Feduniw – convicted and permanently banned for providing false documents in eight loan applications to Westpac, see 16-108MR16-186MR and 16-242MR.
  • Mr Shiv Prakash Sahay – convicted and permanently banned for providing false documents in loan applications for seventeen of his clients to Bankwest and Suncorp Metway Limited, see 15-176MRand 15-128MR.