Financial services firm IOOF has emerged from a 12-month ASIC investigation of allegations of insider trading and front-running without receiving formal penalties.
ASIC announced on Friday it had concluded an investigation of IOOF, commenced in July 2015, concerning allegations aired in the Fairfax Media press.
The Fairfax articles referred to a whistleblower, subsequently sacked by IOOF, who alleged the research division of the company was involved in the trading of securities prior to the release of market-sensitive IOOF research reports.
Nationals Senator John Williams aired a number of specific allegations against IOOF's head of advice research, Peter Hilton, in the Senate on 25 June 2015.
ASIC said it had completed a “thorough review of the circumstances and trades involved”.
“This review determined that the release of the research reports had no material effect on the price of the relevant securities and there was no other evidence to warrant the commencement of a formal investigation,” said ASIC.
“As such we have decided to take no further action in relation to these allegations."
However, ASIC’s review identified a “number of concerns” relating to IOOF’s compliance arrangements, breach reporting, management of conflicts of interest, staff trading policy, disclosure, whistleblower management and protection and cyber security.
“We have raised these concerns with IOOF. We have also advised IOOF that in our view the corporate culture at that time within IOOF contributed to these issues occurring,” said ASIC.
The corporate regulator added that it “welcomed” steps by IOOF to rectify the issues in its business, as identified by a PricewaterhouseCoopers independent review.
IOOF has made significant changes to its policies and procedures as a result.
“While ASIC welcomes such initiatives and steps taken by IOOF to rectify these issues, ASIC has also reached an agreement with IOOF to engage an external compliance consultant to conduct an expanded, broader and more comprehensive review of compliance arrangements within all IOOF business units,” said ASIC.
“ASIC will continue to monitor and work cooperatively with IOOF and its board to ensure the necessary changes are properly effected.”