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15-357MR ASIC imposes licence conditions on Morgans Financial Limited
ASIC and Morgans Financial Limited (Morgans) have agreed to the imposition of new licence conditions on Morgans' Australian financial services licence.
This action by ASIC follows a number of activities, including a surveillance of Morgans’ compliance with financial services laws and in particular, the general obligations of financial services licensees.
ASIC's surveillance identified concerns relating to Morgans' arrangements for monitoring and supervising its representatives after a number of serious breach incidents over recent years, which in Morgans' case, is compounded by its extensive representative and branch network.
ASIC expects Market Participants to maintain adequate monitoring and supervision arrangements as integral features of their risk and compliance frameworks.
ASIC was also concerned about Morgans' internal controls for the handling of confidential market-sensitive information such as restrictions on staff trading, information barriers and managing conflicts of interest in relation to corporate transactions.
ASIC expects Market Participants to have detailed guidance for staff in these circumstances to mitigate against the risk of insider trading and conflicts of interests for staff.
Morgans has consented to the licence conditions. This includes an agreement to appoint an independent compliance consultant to review and evaluate their compliance measures. The independent compliance consultant will report to ASIC and Morgans early next year on the adequacy of these measures and provide recommendations as to any steps that should be taken to ensure that Morgans' compliance measures are adequate.
The licence conditions also require Morgans to advise ASIC of any recommendations Morgans do not propose to implement and provide reasons for any such decision.
ASIC acknowledges Morgans' proactive and cooperative approach to improving its compliance standards.
Morgans operates a traditional stockbroking and wealth management business providing execution and settlement services, as well as personal and general financial advice services, to over 60,000 active clients. Morgans also conducts corporate transactions such as capital raisings and advisory services. As of November 2015, Morgans has approximately 500 authorised representatives.
ASIC's Report 393 Handling of confidential information: Briefings and unannounced corporate transactions (REP 393) released in May 2014 refers to AFMA guidelines that contain a number of suggested practices to assist brokers maintain robust internal controls for the handling of confidential market-sensitive information.
REP 393 indicated that ASIC will continue to focus more broadly on ensuring that our market is fair and efficient including by maintaining high standards for the treatment of confidential market-sensitive information.