On 17 March Societe Generale Securities Australia Pty Ltd (SGSAPL) appeared in the Downing Centre Local Court in Sydney on criminal charges, including two counts of failing to pay client money into segregated authorised bank accounts and two counts of failing to comply with requirements relating to a client money bank account.
ASIC alleges that between December 2014 and September 2018 SGSAPL failed to comply with client money obligations, in contravention of criminal offence provisions under sections 993B(1) and 993C(1) of the Corporations Act 2001 (the Act).
Client money provisions protect the interests of clients of Australian financial services (AFS) licensees by separating client money from money belonging to licensees. Breaching client money provisions is serious misconduct and risks undermining investor confidence.
The maximum penalty for each of the charges is 250 penalty units, approximately $45,000.
The Commonwealth Director of Public Prosecutions is prosecuting the matter.
The matter has been adjourned for a Case Management Hearing on 12 May 2020.
Background
SGSAPL provides financial services in equity derivative sales, prime services and clearing, and provides a range of financial products including ASX24 futures and options and OTC ('over the counter') derivatives. SGSAPL's clients are wholesale clients, including financial institutions, hedge funds, asset managers, and various corporate clients.
Under section 981A(1) of the Act 'Client Money' is:
- •money paid to a financial services licensee in connection with a financial service that has been provided, or will or may be provided, or
- •money paid to a licensee in connection with a financial product held by a person.
Under s981B(1) of the Act, an AFS licence holder must ensure that client money is paid into a client money account. An AFS licence holder is only permitted to make payments out of a client money account as specified by the Corporations Regulations.
