The Australian Securities and Exchange Commission (ASIC) informed on Wednesday that the Federal Court had fined Australian Investment Exchange Limited (AUSIEX) and Commonwealth Securities Limited (CommSec). The cumulative penalty exceeds $27 million and is the largest one in the regulator's history for similar breaches.
CommSec needs to pay $20 million, while AUSIEX was slapped with $7.12 million for breaching the Market Integrity Rule. According to the ASIC statement, the entities used almost 121,000 occasions to overcharge brokerage fees, earning an additional $4.3 million.
"It is essential that market participants have appropriate systems, governance, and controls in place to ensure they meet their obligations to both their customers and the financial markets in which they operate. CommSec and AUSIEX both demonstrated widespread, systemic compliance failures over a nine-year period. CommSec's failures also resulted in millions of dollars being overcharged to customers," Sarah Court, the Deputy Chair of ASIC, said.
"ASIC will continue to take action and seek significant penalties where the market and trading participants fail to comply."
In addition, the Court ordered independent evaluations of CommSec and AUSIEX's performance in providing financial services. The Court lists as many as seven examples of violations of the Market Integrity Rules in its statement. AUSIEX and CommSEC failed to ensure that their services were provided fairly, honestly and efficiently.
Although the penalty imposed is the highest ever, it could have been even larger. However, the Court considered the companies' early admissions and cooperation in this matter.
ASIC Secured $230m in Civil Penalties Last Year
The Australian financial market watchdog said last week it secured a total of $229.9 million in civil penalties due to its enforcement activities performed during the 2021-2022 FY. Simultaneously, the regulator has secured convictions against more than 30 individuals.
"We have worked with industry to bed down significant reforms which offer consumers and investors greater protection from poor behavior, through more rigorous accountability and obligations on providers of financial services," ASIC explained in the statement.
ASIC reported the newest numbers within its Annual Report for 2021-2022, outlining main enforcement actions during the last period. At that time, the financial watchdog strongly focused on protecting consumers' interests, reducing the amount of trading and investment risks.
