The Australian Administrative Appeals Tribunal (AAT) has granted retail broker AxiCorp a stay on the local regulator, the Australian Securities and Investments Commission’s (ASIC) decision to suspend its licence for four months.
ASIC issued the ban at the start of the year, at which time AxiCorp appealed the decision, and also asked for the proceedings to remain confidential – while it has one the stay pending a final decision by the Tribunal and can therefore continue business, the confidentiality appeal was lost.
ASIC suspended AxiCorp’s licence after an investigation found that it had failed to comply with financial services laws. This included the requirement to pay client money into an account with an Australian authorised deposit-taking institution; lodge product disclosure statement (PDS) in-use notices with ASIC; comply with the ASIC derivative transaction rules; comply with client money reporting rules; and lodge financial statements with ASIC by the due date.
AxiCorp was also found to have breached Condition 3 of its licence which requires the firm to establish and maintain compliance measures that ensure, as far as is reasonably practicable, that the licensee complies with the provisions of the financial services laws. ASIC says it also found that AxiCorp is likely to contravene its obligations under s912A of the Corporations Act as a result of deficiencies and systemic failures in its compliance regime.
The suspension is a high-profile instance of ASIC enforcing one of its long-term key targets – the improvement of practices in the retail OTC derivative sector. Last year the regulator issued a report which found that practices in the industry fell short of its expectations, however ASIC has for many years warned about the retail segment, most notably in 2016 when it highlighted “significant and widespread” compliance failures amongst brokers.