Pershing Securities Australia (PSAL) has pleaded guilty to mishandling client monies and in turn is the first company in Australia to face criminal prosecution for breaching client money provisions.
The Australian Securities and Investments Commission (ASIC) said in an announcement that the provisions were designed to protect the interests of Australian financial services licensee clients by ensuring that client money was kept separate from licensee money.
PSAL pleaded guilty at the Downing Centre Local Court in Sydney to:
- Breaching s993B(1) between 25 January, 2016, and 31 December, 2018, by receiving money in connection with financial services, and then failing to pay that money into an account that satisfied the client money requirements within s981B of the Corporations Act 2001; and
- Breaching s993C(1) between 30 June, 2016, and 16 December, 2017, through making payments out of a client money account that were not permitted by reg 7.8.02 of the Corporations Regulations.
ASIC said each offence carried a maximum penalty of 250 penalty units (approximately $45,000).
PSAL also admitted guilt to a third s993B(1) breach that took place on 21 August, 2017.
ASIC noted that as part of the plea, PSAL would not be sentenced on this breach but it would be taken into account during sentencing for the other charges.
The matter has been listed for sentence on 27 July, 2020.