ASIC has banned Mr Shawn Hickman, of Middle Cove, New South Wales, from providing financial services for six years after he engaged in unauthorised discretionary trading on his clients' accounts and created false records.
Mr Hickman was a representative of Macquarie Equities Limited (MEL) from February 2008 to March 2013.
ASIC's investigation found that in the period from November 2009 to October 2012, Mr Hickman engaged in discretionary trading on six client accounts. MEL has prohibited its representatives from engaging in discretionary trading on behalf of clients since 2004.
Mr Hickman breached the financial services laws by holding out and representing to those clients that he was authorised by MEL to operate a discretionary trading account in circumstances where he was not.
ASIC also found that Mr Hickman created order records that falsely indicated he had received execution only instructions from clients prior to trading when he had not, in circumstances where he had engaged in unauthorised discretionary trading.
It was further found that Mr Hickman engaged in misleading and deceptive conduct by witnessing the signature of a client he had never met in person and by creating an order sheet which falsely stated that 14 clients called him on the same day between 7.00am and 9.50am and provided him with the same execution only instructions in relation to an options transaction.
ASIC Deputy Chairman Peter Kell said 'Investors should feel confident that financial advisers are acting within the authority given to them by their licensee at all times and appropriately representing their interests. ASIC will act to remove advisers who fail to do so'.
MEL is currently conducting a review process to compensate clients of Mr Hickman for any losses suffered as a result of his conduct as part of a broader client remediation process which has been undertaken by MEL as agreed under an enforceable undertaking accepted by ASIC in January 2013 (refer 15-022MR).
Mr Hickman has a right to appeal to the Administrative Appeals Tribunal for a review of ASIC's decision.
Background
ASIC's action against Mr Hickman is part of ASIC's Wealth Management Project, commenced in late 2014 with the objective of lifting standards in major financial advice institutions.
Under this project, ASIC is undertaking a number of investigations and proactive risk-based surveillances, with particular focus on compliance in large financial advice businesses. Since the project commenced, ASIC has banned four advisers,including Mr Hickman, from the financial services industry (Brett O'Malley, refer, 15-121MR; Brian Farber, refer 15-178MR and Rebecca Locksley, refer 15-070MR).
Discretionary trading is an arrangement by which a client gives a financial adviser the discretion to make investments on their behalf without the need to receive instructions from the client before each transaction. Under these arrangements, it is agreed that the financial adviser will use their investment expertise to generate a financial return for the client using the client's funds.
Execution only refers to a situation in which a client (or their authorised representative) instructs a financial adviser to conduct a specific transaction in a particular product. In these instances, the adviser is simply carrying out the instructions of the client.