Senator Williams delivered a speech about IOOF to the Senate on Wednesday night following allegations of front-running and insider trading at the financial services firm in the Fairfax press over the weekend.
“Today there is a stain on IOOF. As if Australians have not been sickened enough by the dodgy financial practices of some at the CBA, Macquarie Private Wealth and the NAB, we now have very concerning allegations of insider trading, front-running and even cheating on exams,” Mr Williams said.
“Instead of reporting these instances to the corporate regulator, ASIC, it was suggested [by IOOF authorities] that a donation be made to a charity,” he said.
Mr Williams named Mr Hilton, head of research at IOOF dealer group Bridges (and head of advice research at IOOF), as “a person who allegedly engaged in front-running when he conducted trades on at least 53 occasions over some 20 years”.
Mr Hilton’s role at Bridges is to make recommendations to affiliated financial planners to buy, sell or hold securities, Mr Williams said.
“In 2009 there was a potential breach assessment report in the research unit. It was investigated by Rob Urwin, head of investigations. Mr Hilton was questioned on his trading activities, including management of some Questor funds. Questor is a subsidiary of IOOF,” he said.
Mr Williams quoted from notes at a meeting between Mr Unwin, Mr Hilton and IOOF group general counsel Gary Riordan that resulted in a warning letter issued to Mr Hilton dated 19 May 2009 that was headed ‘First and final warning’.
The letter, signed by then head of wealth management at IOOF Michael Carter, said in part:
“I have considered your response and it is deemed that your behaviour and actions warrant formal warning. In general if you are to continue in this role, your performance/behaviour needs to improve along with your ability to achieve set goals and demonstrate leadership qualities … Please be aware that failure to improve and maintain adequate improvement in the above areas may result in immediate termination of employment.”
“So this was considered a serious enough breach to warrant threatened dismissal by IOOF, but they did not report this to ASIC. Unbelievably, Peter Hilton was later promoted within the company,” said Mr Williams.
“I also have in my possession documents, which are compliance breaches by him, where it is alleged he had junior staff cheat on training and compliance exams on his behalf.
“This results in a final warning, issued on 1 May 2014, where he is told that another breach would result in his dismissal. So that is two warnings to Mr Peter Hilton.
“Every issue I have raised tonight is backed up by a document or clear evidence in writing – and I make no apology for doing such,” said the Senator.
Mr Hilton is currently on leave.
