In a statement on Monday, the Australian Securities and Investments Commission (ASIC) announced that it has banned former Gleneagle Securities fund manager and authorised representative Gregory Tolpigin from providing financial services for three years after he was found to have engaged in naked short selling.
The regulator explained that naked short selling occurs when a person sells certain financial products such as shares that are not held and cannot be transferred to a buyer at the time the person places the sell orders.
ASIC found that Mr Tolpigin had engaged in the naked short selling of shares on 150 occasions totalling more than $7 million between 19 January and 27 August 2021.
According to the regulator, Mr Tolpigin sold shares on the ASX through accounts held with Gleneagle Securities and associated entities. He did not own or borrow the shares at the time he placed the orders to sell them.
“Mr Tolpigin’s sales risked settlement failure in the event that he was unable to buy the shares back prior to settlement, for example, if the shares had been suspended from trading,” ASIC stated.
“The naked short selling also distorted the accuracy of the ASX gross short sales report, published daily. The accuracy of this information contributes to the integrity of Australia’s financial markets.”
In addition to being banned from providing financial services, ASIC confirmed that Mr Tolpigin is also banned from controlling a financial services business or performing any function involved in carrying on a financial services business as an officer.
The regulator indicated that it is reviewing compliance by market participants with the short selling regime.
“ASIC views the prohibition on naked short selling as an essential policy for the maintenance of financial market integrity,” it said.
“It reduces the risk of settlement failure, distortions to the operation of financial markets and abusive short selling that can artificially depress prices. It also improves the accuracy of information available to the market.”
ASIC also noted that it would continue to identify non-compliance and take enforcement action where necessary.