ASIC has accepted an enforceable undertaking (EU) from stockbroker Avalon Pacific Capital relating to its dealing in securities in four Samoan registered and one British Virgin Island registered company listed on the National Stock Exchange (NSX).
The corporate regulator was concerned that Avalon Pacific "ought reasonably to have suspected" that the orders were placed with "the intention of creating a false or misleading appearance of the price of the securities".
As part of the EU, Avalon has undertaken to cancel its NSX market participant status and not to deal in NSX-listed companies via another market participant.
The regulator said Avalon appeared to ignore evidence that the trades were likely to increase the price of the securities, that the orders were provided to Avalon by individuals who "appeared to be involved in the management of the companies", and that the substantial price increases were not matched by company announcements that would explain the price increases.
ASIC commissioner Cathie Armour said, "As gatekeepers, market participants must have systems in place to detect and prevent suspicious orders from being placed on Australian licensed financial markets. ASIC considers this is a significant outcome that will help protect investors and ensure the integrity of the market."
The regulator's investigation into the trading of the securities is continuing.
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