With at least five financial adviser bans, including an adviser who falsified his exam result, the Australian Securities and Investments Commission (ASIC) has had a busy start to the year.
One of the most discussed news in Q1 was the banning of an adviser found to have falsified his financial adviser exam result. ASIC found that in December 2021, Todd Karamian of Sydney had altered his Financial Adviser Certificate from a fail result to a pass result.
He submitted this altered result to his licensee, of which he was a founder, raising the issue of conflict of interest for small licensees where advisers could wear many hats.
Additionally, there were five adviser bans and other legal actions by ASIC between January and March 2023.
January
After being permanently banned in 2019, former adviser Tai Thanh Nguyen from Adelaide pled guilty to two counts of falsifying company books in January 2023.
Bradley Grimm, a former Melbourne financial planner, pled guilty to three counts of engaging in dishonest conduct whilst running a financial services business.
Gregory William Finerty, the director of a business that leased an automated FX trading robot, was banned for four years for carrying on a business without an Australian financial services (AFS) licence and engaging in misleading and deceptive conduct.
February
Former adviser John Wertheimer was sentenced to 18 months’ imprisonment for making 48 unauthorised transactions on the trading accounts of clients using the Netwealth online trading platform. He also lodged five investment instruction documents that contained forged signatures.
Adviser Rahul Goel was permanently banned and sentenced after dishonestly obtaining over $35,000 from his clients’ superannuation. After obtaining First Nations consumers’ super details, he falsified benefit access applications or hardship applications and retained up to 100 per cent of the payout in fees. He had previously been jailed for 18 months in December 2022.
Sydney-based Sean John Sweeney was permanently banned after he was convicted of fraud offences in November 2022. Sweeneys’ appeal application is currently pending.
A former CEO, Akhilesh Kamkolkar, pled guilty to two counts of engaging in dishonest conduct in relation to financial products or services for obtaining nearly $1 million from four investors and failing to invest those funds according to their instructions.
March
Douglas Cecil Allen was banned from providing financial services for three years for using a “layered advice” strategy and providing advice that was not in the clients’ best interests, was not appropriate, and made false or misleading statements.
Later that month, former financial services director Mark McCabe was charged with eight counts of dishonestly obtaining a financial advantage by deception in the amount of $940,350 from eight people, seven of whom were clients of his companies.
Sydney-based Russell Sandiford was charged with dishonest conduct after he obtained $459,000 from 79 clients, which was used for his own benefit rather than investment purposes as had been agreed with clients.
Financial services firms not spared
In January, ASIC issued an interim stop order preventing Vasco from offering or distributing the Pivotal Diversified Fund to retail investors because of deficiencies in the target market determination (TMD).
The regulator alleged the underlying investments in the hedge funds were exposed to a very high-risk strategy; the managed fund invested in property development projects was subject to project financing, valuation and construction risks; and the private equity fund was illiquid and leveraged, but these had not been appropriately considered by Vasco.
In March, ASIC issued interim stop orders on three BT Advance Asset Management Funds as it believed the TMDs were very broadly drafted and failed to define key concepts and the distribution conditions outlined were inadequate.
