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Category: Consumer Finance / Consumer Protection / Banking / Business, Economics and Finance

CommSec pays $700,000 in penalties, $1.1 million in refunds to clients

Friday, 2 Sep 2016 12:00:30 | Thuy Ong

Commonwealth's brokerage arm reported itself to ASIC in 2013. (ABC News: Margaret Burin)

CommSec, the brokerage arm of Australia's largest bank, the Commonwealth Bank, has paid $700,000 in infringement penalties and voluntarily refunded $1.1 million to more than 25,000 clients.

The Australian Securities and Investments Commission said CommSec had contravened the Corporations Act, with its systems failing to include proper disclosure on types of trades.

These trades included cross trades and principal trading.

Cross trades refer to where the same broker acts for both the buy and sell side in a transaction.

Principal trading is where the brokerage itself is the buyer of shares that one of its clients wants to sell.

In a statement, ASIC said CommSec also contravened a rule that requires a trading participant to maintain the necessary organisational and technical resources to ensure that "trading messages submitted by the participant do not interfere with the efficiency and integrity of the market".

In a statement, the Commonwealth Bank said it had worked collaboratively with ASIC on the matters after notifying the regulator in 2013.

"We acknowledge and regret these process errors. There were no losses to customers and the errors have now been rectified," said Paul Rayson, CommSec managing director in a statement.

"We notified relevant customers and no complaints or issues have been raised."

Between August 2010 and February 2014, ASIC said CommSec issued 114,841 confirmations to retail clients whose orders were executed as crossings but did not contain the required statement.

Between May 2011 and February 2014, CommSec issued over 50,000 confirmations that failed to disclose principal trades.

The watchdog said CommSec did not have in place adequate organisational or technical procedures or controls that verified the name and address on an issuer holding that matched that of the client.

AustraliaPlus


 

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