CommSec Slapped With $700,000 Fine For Corporate Law Breaches

CommSec has fallen foul of market integrity laws.

03/09/2016 9:41 AM AEST | Updated 03/09/2016 11:02 AM AEST
David Gray / Reuters
Commsec has copped a big fine from ASIC for breaching corporate laws.

The corporate regulator has handed CommSec a $700,000 fine for breaching market integrity rules, including failing to properly disclose certain trading information to clients.

CommSec also voluntarily refunded $1.1 million in brokerage to more than 25,000 clients, the Australian Securities and Investments Commission (ASIC) said.

ASIC said the Commonwealth Bank-owned broker had executed 114,841 trades for retail clients but did not disclose that it was acting for both the buyer and the seller in those transactions, known in corporate parlance as "crossing".

Stockbrokers are obliged to disclose when they are acting on both sides of a trade in this way, according to Fairfax Media. ASIC said CommSec's technical systems "failed to include the required disclosure of crossings" a number of times between August 2010 and February 2014.

Commsec was also slapped with fines for another breach of corporate rules known as "trading as principal", which must also be disclosed to clients.

ASIC said CommSec cooperated throughout the investigation and did not dispute any material facts.

CommSec Managing Director Paul Rayson conceded the company had made mistakes.

'We acknowledge and regret these process errors," he is quoted as saying.

"There were no losses to customers and the errors have now been rectified. We notified relevant customers and no complaints or issues have been raised."

The penalty comes as leader Bill Shorten penned an op ed in this week's edition of The Saturday Paper, reiterating his call for a Royal Commission into the banks.

"Australians and their loved ones have had insurance claims denied. Others have lost their entire savings because of bad advice about dodgy and high-risk investments," he wrote.

"We're not talking about isolated incidents here. There is a systemic, cultural problem in the banks of putting profits before people. And it must be tackled.

"Anything less than a royal commission is a cover-up. Half-baked measures from the government designed to gloss over these scandals simply will not cut it."

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