Financial services' bad apples
A small number of bad apples in the financial services industry once again managed to attract significant attention in 2012.
The past year has seen a number of bad apples emerge into the spotlight.
The most significant event on this front seems to be the cancellation of Morrison Carr’s license and the banning of its sole director – Denis Cardakaris.
ASIC found Cardakaris transferred the business from his old licence (Morisson Carr Australia) – to the new license (Morisson Carr Financial Services), affecting the ability of clients to pursue their claims.
In addition to that, Cardakaris lied to the company’s professional insurer and was deemed “not of good fame” by ASIC Commissioner Peter Kell.
Another failure which made nation-wide news was that of Victorian debenture issuer Banksia, which collapsed in October owing around $660 million to retail investors, many of whom are over 55 years of age.
Being a debenture issuer, Banksia was not regulated by the Australian Prudential Regulation Authority, which could potentially leave many investors without full compensation.
And then there was Standard & Poor’s (S&P), which gave a “AAA” rating to a failed product called Rembrandt Notes.
The researcher was ordered by the Federal Court to pay a third of the $16 million in damages incurred by retail investors from Bathurst Regional Council – the other two thirds to be paid by ABN Amro and Local Government Financial Services (LGFS).
However, the court also ordered both S&P and ABN Amro to pay around $8 million each to LGFS for losses incurred when it sold a cache of Rembrandt notes to its parent company upon the downgrading of the notes by S&P.
There were also quite a few rogue financial advisers who received either temporary or permanent bans from the industry:
- Former Commonwealth Financial Planning advisers – Andrew Awkar, Jane Duncan and Joe Chan received permanent, three-year and two-year bans respectively, bringing the number of banned CommFP advisers to six.
- Former WealthSure authorised representative Janeece Giraldo received a five-year ban from the financial services industry, mostly for engaging in misleading and deceptive conduct.
- Former PIS adviser received a three-year ban for unjustifiably placing clients in geared products.
- Former Storm Financial and current AAA Financial Intelligence adviser, Walter Fullerton-Smith, received a life ban by ASIC due to unprofessional conduct during his days at Storm.
Recommended for you
In this week’s episode of Relative Return Insider, AMP chief economist Shane Oliver joins the show to discuss Australia’s stagnating productivity ahead of the government’s economic reform roundtable, and how picking all the “low-hanging fruit” for reform in the ’90s helped kick off a surge that has since stalled out.
In this episode of Relative Return Insider, host Keith Ford is joined by Cyber Daily deputy editor David Hollingworth to take you inside the evolving landscape of cyber crime, how even huge companies can be at risk of breaches, and what that means for anyone trying to understand the risks.
The latest episode of Relative Return sees host Laura Dew chat with Richard Ivers and Mike Younger, co-portfolio managers at Prime Value Asset Management, on their newly launched Microcap Fund and opportunities in small and mid-cap shares.
In this week’s episode of Relative Return Insider, hosts Maja Garaca Djurdjevic and Keith Ford dive into the week's top news, from investors remaining blasé about tariff announcements to bitcoin surging and unemployment numbers.
