Updated with the AAT’s decision below:
Perth-based accountant, Keith Douglas Bowker, has been banned from providing any financial services for six years.
The banning follows an ASIC investigation into Mr Bowker’s conduct between November 2016 and March 2017 when he applied for and sold shares, purportedly for his clients, in two companies that subsequently listed on the Australian Securities Exchange (ASX).
ASIC found that Mr Bowker:
- applied for and sold shares on behalf of other people without their knowledge and/or consent;
- knowingly provided false information to these companies which was then provided to the ASX so that the companies could meet the ASX minimum-spread requirement for admission to the ASX official list;
- engaged in conduct relating to a financial product that was misleading or deceptive, or was likely to mislead or deceive;
- contravened a financial services law; and
- is likely to contravene a financial services law.
The conduct came to ASIC’s attention as a result of investigations into the provision of shareholder spread through artificial means.
Mr Bowker may apply to the Administrative Appeals Tribunal for a review of ASIC’s decision.
The ASX Listing Rules set out the minimum requirements that must be satisfied for a company to list its securities on the ASX. One of these conditions includes that a company must have at least 300 shareholders (the minimum spread requirement).
The purpose of the minimum spread requirement is to demonstrate that there is sufficient investor interest in the company to justify its listing. This operates to ensure some level of liquidity at the time the company is initially listed and keeps poorer quality applicants that are not able to attract sufficient investor interest to meet the minimum spread requirement from being admitted to the ASX official list.
ASIC reminds market participants of their obligations when acting on behalf of companies seeking admission to the official list of ASX Limited, pursuant to both the ASX Listing Rules and the Corporations Act.
Mr Bowker has appealed the decision to the Administrative Appeals Tribunal (AAT). The effect of the banning continues pending a review of the decision.
On 6 March 2020, the AAT delivered its decision, finding that Mr Bowker engaged in misleading or deceptive conduct in breach of section 1041H of the Corporations Act and reduced the banning period from six years to two years.
The AAT agreed with ASIC’s original decision, that Mr Bowker engaged in conduct relating to a financial product that was misleading or deceptive, as some of the named individuals that he provided details of were not genuine investors and he knew the names he supplied would be passed on to the ASX for the purposes of artificially satisfying the minimum spread requirements.
The AAT found that at the time of the hearing, Mr Bowker no longer held an intention to establish a broking firm which would have involved him providing financial services and therefore was unlikely to be in a position to breach a financial services law in the foreseeable future. In reducing the six-year banning period, the AAT considered that Mr Bowker was only incidentally involved in the provision of financial services in his practice as an accountant and that he did not ultimately gain financially from his conduct.