ASIC bans two in gatekeeper crackdown

The Australian Securities and Investments Commission has permanently banned a financial adviser and a mortgage broker for fraudulent activity.

Lawson Donald was banned from providing financial services after he was convicted of offences involving dishonesty. ASIC determined that a permanent banning was necessary to maintain investor and consumer confidence in the financial system given his criminal conviction.

Donald was a client adviser at Bell Potter Securities between February 1, 2003 and April 21, 2008.

According to the regulator, Donald dishonestly used his position as a Bell Potter employee with the intention of gaining a personal benefit by rebooking share trades over a three-year period.

Rebooking is the transferring of trades from one client account to another client account. Specifically, Donald rebooked profitable share trades from a client account to two accounts controlled by him then sold those shares for a profit.

He was also found to have rebooked non-profitable share trades from the two accounts controlled by him to a client’s account, thereby avoiding a loss. The total value of the rebookings was over $1.7 million.

In August 2012, Donald pleaded guilty to one charge of dishonestly using his position as an employee with the intention of directly or indirectly gaining an advantage for himself or someone else.

In April this year, he was sentenced in Sydney’s District Court to two years and six months jail, which was suspended on condition he enter into a two-year good behaviour bond. The Commonwealth Director of Public Prosecutions has appealed the sentence handed to Donald on the basis that it is manifestly inadequate.

However, it has taken the regulator until this week to permanently ban him.

“ASIC is all about ensuring investors and consumers can be confident and informed, and a big part of this is making sure gatekeepers, such as stockbrokers, do the right thing and comply with the law. When they don’t, ASIC will take action,” said ASIC commissioner Greg Tanzer.

Lawson is the second former Bell Potter Securities adviser to have been sentenced to a jail term this year after Glen Evans of Leichhardt, New South Wales, pleaded guilty in the Sydney District Court to 10 counts of misappropriating funds in May.

Chu up and spat out

A Perth-based mortgage broker has also been permanently banned from engaging in credit activities after an ASIC investigation found that he had falsified a letter stating finance approval had been provided for a client.

Eric Ying Ching Chu was formerly employed by Mortgage Specialists as a trustee for the Janet Smith Family Trust trading as Specialist Mortgage.

ASIC’s investigation found that after falsifying the letter, Chu then forwarded that letter to a settlement agent so that the Commonwealth Bank would issue a loan in the amount of $256,000.

ASIC banned Chu on the basis that he was not a fit and proper person to engage in credit activities.

“ASIC takes the role of gatekeepers very seriously. People who do not take their obligations seriously will be removed from the industry,” said deputy chairman Peter Kell.

Chu has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC’s decision.