It is a dealer principle’s worst nightmare. A licence revoke and 39 proper authority holders across 29 offices shut down from daily operations.
Last week, securities dealer Chapel Road became the first group in three years to be hit with a licence revoke by the Australian Securities and Investments Commission (ASIC).
In February 1998 Perth based Hutcherson Denny Investment Services had its licence revoked after ASIC (then the ASC) found the group had not provided adequate training and supervision to its proper authority holders (PAH).
ASIC NSW director of Deposit-taking, Insurance, Superannuation and Consumer division Lucienne Layton says the recent action taken by ASIC has not been common place in the past as there is usually more of a focus on the PAHs.
“This is not something that has been done frequently up to this point. There has been more of an emphasis on the proper authority holders,” she says.
The industry watchdog found Chapel Road breached licence conditions by failing to have an adequate compliance system in place and failing to obtain the technical knowledge needed to perform its responsibilities. ASIC also found the group failed to provide adequate initial and ongoing training to its PAHs, as well as adequate supervision of them.
Layton says ASIC commenced investigations into the group about April last year after the January 2000 ban of Steven Michael Cochrane, then a Chapel Road proper authority holder. Cochrane was banned for life from acting as a representative of a securities dealer or investment adviser, after ASIC found he had not performed the duties of a dealer representative efficiently, honestly and fairly.
“If a proper authority holder is behaving improperly it is an indication that there are systemic issues, and we [ASIC] will then take a look at the dealer group,” Layton explains.
Responding to the licence revoke Chapel Road has applied to the AAT for a review of ASIC’s decision. Layton says the appeal could take up to three or four months to be heard.
Meanwhile, Chapel Road has applied for a stay of the order subject to the review however negotiations regarding the stay were also broached with ASIC last week, according to Chapel Road chairman Jim Gellett.
“ASIC have agreed to a stay with certain conditions, and we are negotiating those conditions now.”
“The proper authority holders have been informed, and know they can not give advice until the stay is granted,” he said last week.
However ASIC refused to comment on the status of the Chapel Road stay application.
If an agreement with ASIC is not reached, Gellett says the stay application with the ATT could take about a week to go through.
And if the stay is not granted? Gellett says Chapel Road is already working on a recovery strategy.
“We are working on alternatives now. A disaster plan, if you like.”
