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Regulator hands down $3.1m penalty to subsidiary of PE firm

By Laura Dew
3 minute read

It has received an infringement notice from the corporate regulator for alleged serious failures, requiring it to pay $3.1 million and enter into an enforceable undertaking.

Ascot Securities, a subsidiary of a private equity firm Amalgamated Australian Investment Group (AAIG), saw an infringement notice published on the Markets Disciplinary Panel Outcome Register today.

During the relevant times, Ascot was a small securities business – with three directors and three designated trading representatives and no more than 20 employees – which traded in non-complex products limited to listed securities. Crucially, it did not have a dedicated compliance team and relied on the wider AAIG team.

The Markets Disciplinary Panel (MDP), a peer review panel which makes decisions about whether infringement notices should be given for alleged breaches of market integrity rules, alleged serious failures at the firm.


It said it had reasonable grounds to believe that Ascot had contravened s798H(1) of the Corporations Act as a result of contravening the market integrity rules on numerous occasions, including by entering a client’s orders onto the ASX where it should have suspected the orders were manipulative and failing to report the client’s suspicious trading to the Australian Securities and Investments Commission (ASIC).

The MDP considered Ascot’s entry of and failure to report suspicious orders were serious and the result of Ascot’s broader failure to have appropriate supervisory policies, procedures, and resources to identify and report suspicious trading by its clients.

The MDP also considered that the deficiencies in Ascot’s policies and procedures were exacerbated by its failure to review and update those policies despite senior compliance staff considering them to be deficient. As a result, the MDP considered Ascot’s conduct to be negligent.

On 24 November 2023, the MDP issued the infringement order which required Ascot to pay a penalty of $3.1 million and enter into an enforceable undertaking. The enforceable undertaking would have required Ascot engaging an expert to review its supervisory policies and procedures and organisational and technical resources and make recommendations.

ASIC said the date for compliance with the infringement notice was 21 December but that Ascot decided not to do so.

The firm has now ceased operating as a market participant, surrendered its Australian Financial Services Licence (AFSL) and informed ASIC it will be wound up. The licence was cancelled by ASIC on 19 January 2024.