ASIC ramps up action on AFSL’s financial reporting

A fourth financial services licensee has been pulled up in recent weeks relating to financial reporting as the corporate regulator updates on its enforcement action at the end of the third quarter of 2023.

On 3 November, Melbourne-based Odyssey Equity Finance appeared via legal representatives in the Dandenong Magistrates’ Court charged with multiple criminal offences relating to financial reporting.

ASIC alleges that the firm failed to lodge the reports for each of the financial years ended 30 June 2020, 2021 and 2022, as required under the Corporations Act. 

Odyssey has been charged with three counts of failing to lodge a profit and loss statement and balance sheet and three counts of failing to lodge an auditor’s report with the profit and loss statement and balance sheet.

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The matter has been adjourned for mention on 7 March 2024 at the court. 

Previously, at the end of October, two financial services companies, APC Securities (formerly known as McFaddens Securities, Dayton Way Financial, or Avalon Pacific Capital) and Brava Capital (formerly known as Dayton Way Securities) were also charged in separate proceedings for the same allegations from ASIC. 

Appearing in the Sydney Downing Centre Local Court, the firms were charged with three counts of failing to lodge a profit and loss statement and balance sheet and three counts of failing to lodge an auditor’s report with the profit and loss statement and balance sheet.

Meanwhile, on 19 October 2023, ASIC suspended the AFSL of financial services provider Celtic Equities Management for six months after it found the firm failed to lodge its financial statements and audit report for the financial years ended 30 June 2017 to 30 June 2022.

ASIC stated Celtic Equities Management failed to pay its outstanding ASIC industry funding levies and its outstanding late payment penalties. 

If the firm had not complied with the outstanding compliance obligations by the end of the suspension period, ASIC said it will consider cancelling the licence.

ASIC action in 2023

As at 30 June, the corporate regulator said it had secured more than $700,000 in penalties from firms for failing to lodge financial reports, hold annual general meetings (AGMs) and to maintain the required number of directors and resident directors.

Three of ASIC’s prosecutions during the period resulted in fines of more than $100,000 including a $123,000 penalty for ALT Financial Group for failing to lodge annual reports and hold AGMs between 2018 and 2021 and for failing to maintain the minimum number of company directors.

Meanwhile, at a recent parliamentary joint committee in November, ASIC chair Joe Longo shared a further update of the regulator’s enforcement action. 

By the end of the third quarter of 2023, it had commenced 91 investigations and filed 18 civil penalty proceedings, with $141 million in civil penalties imposed by the courts.

Additionally, the Office of the Commonwealth Director of Public Prosecutions (CDPP) charged some 23 individuals or companies as a result of ASIC referrals, with 146 criminal charges laid or companies prosecuted. 

The regulator disqualified or removed 27 individuals from directing companies. It also banned or suspended 58 individuals or companies from providing financial services or engaging in credit activities.

Longo added: “ASIC is made up of hard-working, committed people with specialist expertise in their various fields. I’m proud of what we have been able to achieve together in the last financial year and the last quarter. The annual report and our continuing enforcement outcomes certainly reflect that.”