Former financial advisor pleads guilty to dishonest conduct

On 4 March 2020, Mr Mark Damion Kawecki, of Frankston Victoria, appeared at the Melbourne Magistrates’ Court and pleaded guilty to two counts of dishonest conduct in relation to attempts to satisfy the minimum spread requirement for companies seeking to be admitted to the ASX. This is the first prosecution of its kind.

Under the ASX Listing Rules, a company must meet the ‘minimum spread requirement’ (a minimum number of unrelated shareholders in the company) before its shares can be quoted and traded on the ASX. This serves to ensure some level of liquidity at the time the company is initially listed and to keep poorer quality applicants, that are not able to attract sufficient investor interest, from being admitted to the ASX official list. ASIC considers attempts to satisfy the minimum spread requirement through artificial means as serious misconduct which interferes with the integrity of our markets.

Mr Kawecki pled guilty to two counts of dishonest conduct contrary to s1041G of the Corporations Act 2001 (Cth), namely:

  1. Engaging in dishonest conduct in relation to the submission of applications for shares containing false information about the applicant’s address to the share registry for three entities seeking admission to the ASX official list between about 19 January 2015 and 23 December 2016; and
  2. Engaging in dishonest conduct in relation to the submission of applications for shares and a table of applications for shares containing false or misleading information about the beneficial holder of shares to the share registry for a company seeking admission to the ASX official list and to a stockbroker assisting an entity’s re-admission onto the ASX official list between about 23 January 2015 and 9 July 2015.

Each offence carries a maximum penalty of ten years’ imprisonment or a fine of up to 4,500 penalty units or both.

ASIC’s investigation into Mr Kawecki’s conduct related to the provision of false or misleading information contained within applications to participate in public offerings by four entities seeking to be admitted (or re-admitted) to the ASX official list.

Mr Kawecki has been committed to the Melbourne County Court on the charges. The next hearing date has been set down for 18 August 2020.

Background

In addition to Mr Kawecki’s guilty plea, as a result of ASIC’s investigation into suspected contraventions of the ASX Listing Rules into the minimum spread requirement:

  • in June 2018, ASIC banned Mr Kawecki from providing financial services for a period of seven years following an ASIC investigation into the conduct (18-185MR)
  • in October 2018, a Sydney authorised representative was prohibited from providing financial services for a period of five years under the terms of a court-enforceable undertaking (18-319MR).

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 2001.

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