The Commonwealth Bank’s brokerage business, CommSec is facing civil action initiated by the Australian Securities and Investments Commission (ASIC) alleging it overcharged brokerage fees to customers on 120,933 occasions, totalling $4,352,194 for nearly 10 years.
ASIC announced it has commenced civil penalty proceedings in the Federal Court against Commonwealth Securities Limited (CommSec) and Australian Investment Exchange Limited (AUSIEX) for alleged breaches of the Market Integrity Rules, Corporations Act and ASIC Act (CommSec only) relating to systemic compliance failures in the delivery of financial services.
In the case of Commsec, ASIC is alleging the overcharging of brokerage fees occurred between August 2010 and February 2020.
An ASIC announcement said the regulator was alleging the conduct spanned a significant period of time and involved failures across multiple systems and business areas. Commsec and AUSIEX submitted over 60 notifications to ASIC relating to the conduct.
“It is ASIC’s view that the number, breadth and duration of the conduct is significant and indicates the entities did not have adequate systems and processes in place to ensure compliance with their relevant obligations under their Australian Financial Services licence (AFS licence) and pursuant to the Market Integrity Rules,” the statement said.
The statement alleged the following conduct;
- CommSec and AUSIEX failed to comply with client money reconciliation requirements;
- CommSec and AUSIEX did not provide accurate confirmations to customers for certain market transactions;
- CommSec did not have appropriate system filters to detect possible trades where there would be no change of beneficial owner (known as wash trading);
- CommSec and AUSIEX failed to comply with their best execution policies and procedures;
- CommSec failed to enter into the required warrant agreement forms with clients and provide an explanatory booklet before accepting an order from a client to purchase a warrant on the market for the first time; and
- CommSec and AUSIEX failed to include the require
