Our client was served with a Notice to attend a Section 19 Examination at ASIC. The examination was to investigate a situation that arose as part of their employment as a financial advisor.
What is alleged to have occurred?
The allegation was that our client took on a new client who was disgruntled with their previous financial advisor. In reviewing the client file that was sent to them by the previous financial advisor, our client came across records which they believed establish that a fraud had been committed. Our client notified their new client and set about trying to retrieve the ‘misappropriated’ funds by impersonating the account holder. Our client then learned that the previous advisor had two clients with the same first name and surname and documents relating to another client had been mistakenly included in the transferred client file.
It then became obvious that there had not been any fraud, and our client sought to return the ‘misappropriated’ funds by again impersonating the account holder. All of the money was ultimately returned, in full. The real account holder learned of what had occurred and my client attended to the account holder in person to provide an explanation and an apology.
What happened at court?
Upon receipt of the Section 19 Examination Notice, our client attended our office for advice and representation. We were able to walk the client through the process and ensure that they understood their rights and responsibilities. ASIC interviews are different from records of interviews conducted by Victoria Police, and it is important that people understand the process and their rights. We provided advice about what some of the implications may be beyond the Examination and attended with the client to provide professional support and assistance.
We then filed written submissions on behalf of the client following the examination. Ultimately, ASIC found that the client had engaged in misleading and deceptive conduct and considered that their conduct constituted a significant contravention of Section 1041H of the Corporations Act 2001. ASIC considered that our client’s actions of impersonating the account holder, even in circumstances where they believed that the account holder was a fraud, was deceptive and likely to mislead the relevant financial institution. Ultimately, ASIC imposed a banning order on the client for a significant number of years.
We then filed an appeal in the Administrative Appeals Tribunal (AAT).
What was the result?
In the AAT, we argued that while the facts of the case were not in dispute, the conduct did not fall within the definition of it being in relation to a financial product or financial service. A detailed analysis around the meaning of ‘in relation to’ and ‘financial services’ was conducted in both written and oral submissions. Ultimately, the AAT found in favour of ASIC’s assessment that the client’s conduct breached Section 1041H of the Corporations Act, enlivening their power to impose a banning order under Section 920A.
There was a great deal of debate about the purpose of banning orders. Our lawyers argued, in part, that this was a highly unusual set of factual circumstances. Our client’s normal performance in their role was otherwise very good, and this was not illustrative of a broader issue, such that the public required protection from our client. Further, given how unusual the facts were, general deterrence had little application and created a disproportionate penalty.
The AAT ultimately found in our client’s favour. While there was a breach of Section 1041H of the Corporations Act, we were successful in having the banning order removed.
Kristina Kothrakis
Kristina has significant experience in criminal trials and also holds a degree in Science, majoring in Psychology, an invaluable area of knowledge, as many of her clients suffer from psychological disorders.Kristina strives to achieve the best possible result for all her clients. Skilled, decisive and assertive, Kristina demonstrates dedication, care and professionalism at all times.
View Kristina Kothrakis' profile.
DISCLAIMER: This is a real case study of an actual case from our files dated 2017. Details pertaining to the client have been changed to protect their privacy. The sentence imposed and the charge have not been altered. These case studies are published to demonstrate real outcomes and give an indication of possible tariffs in Court. We do not guarantee a similar case on these charges will get the same result. Please note that we post results at our discretion, therefore while many case studies are average results, others are notable for their exceptional outcomes. PUBLISHED 14/10/2024
