ASIC has seized the passport of a Patersons Securities (Patersons) broker and frozen his assets after it found him and a colleague might have made inappropriate and risky trades on behalf of their clients.
The financial regulator ordered Canberra based Patersons adviser Eric Hawley to hand over his passport to a solicitor and is seeking a Federal Court order to prevent him from taking or sending assets out of Australia.
Hawley’s colleague Scott McAlister is also under investigation after ASIC suspected the advisers were operating discretionary accounts without the appropriate authority.
ASIC said it was “concerned” that the two advisers might have entered into risky derivatives positions on behalf of clients that were “inappropriate for their circumstances” and without fully advising them of the risks.
Hawley and McAlister joined Patersons in late 2004 from stockbroker Ord Minnett, which is also under the ASIC spotlight.
ASIC has told both firms they will have to compensate any clients that have suffered as a result of the advisers’ misconduct.
The regulator yesterday slapped an enforceable undertaking on Patersons and demanded it conduct a comprehensive review of its compliance procedures.
It has also drafted in an external consultant to spend two years scrutinising Patersons’ advice procedures.
“There are considerable risks when operating managed discretionary accounts. Financial services licensees must have comprehensive arrangements in place to manage these risks,” ASIC’s executive director of enforcement Jan Redfern said.
