The Australian Securities and Investments Commission (ASIC) has permanently banned Mr Neville John Kakoschke, a former options advisor and stockbroker, of Thorngate, South Australia, from acting as a representative of a financial services licensee.

ASIC banned Mr Kakoschke after finding that his conduct as a dealer’s representative contravened the Corporations Act.

During the period of the conduct, Mr Kakoschke was employed as a dealer’s representative of Dicksons Limited between 14 July 1997 and 8 June 2002 and Bell Potter Securities Limited between 11 June 2002 and 7 April 2003.

As a result of its investigation, ASIC was concerned that Mr Kakoschke:

• operated his clients accounts on a discretionary basis without formal agreements in place with his clients and without the knowledge of his principals;
• used clients’ shares without the owners’ consent as security for trading other clients’ accounts and his own personal options trading accounts, thereby placing clients’ investments at risk without their knowledge;
• misled his clients about the true level of exposure in their options positions and the risks involved in options trading; and
• misled his employers about his management of the client accounts.

A consequence of Mr Kakoschke’s conduct was that it enabled some clients’ accounts to trade well beyond their personal financial means and this contributed to those clients sustaining greater losses than they might otherwise have done.

‘Clients of stockbrokers ought to be aware that many stockbroking firms do not allow their advisers to conduct discretionary share or options trading on client accounts. If they are offered such a service, investors should protect their interests by ensuring that the principal is aware of, and has approved, the discretionary trading’, ASIC Deputy Executive Director of Enforcement, Mr Allen Turton said.

Mr Kakoschke has the right to lodge an application for review of ASIC’s decision with the Administrative Appeals Tribunal.