ASIC and Morgans Financial Limited (Morgans) have agreed for an independent compliance consultant to monitor, evaluate and report on Morgans' implementation of recommendations arising from an independent review of its compliance measures.
The consultant completed its review of Morgans’ compliance measures in March 2016, in accordance with initial licence conditions imposed on 30 November 2015 (see: 15-357MR). In its report, the consultant made recommendations for strengthening Morgans' arrangements for monitoring and supervising its representatives, handling confidential market-sensitive information and managing conflicts of interest in relation to corporate transactions.
To address the recommendations made by the consultant, Morgans is undertaking work in an implementation plan and has engaged the consultant to carry out a review of this. Under the updated licence conditions, ASIC will receive regular progress reports throughout the implementation review and the consultant will provide its final report in November 2018.
ASIC Commissioner Cathie Armour said, 'All Market Participants must ensure they maintain adequate monitoring and supervision arrangements. In addition firms must have robust controls pertaining to the proper handling of confidential information and management of conflicts of interest. These measures are fundamental to the community retaining trust in our financial markets.'
ASIC acknowledges Morgans' cooperative approach to improving its compliance standards and addressing ASIC's concerns.
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 across approximately 60 branches Australia-wide. Morgans also conducts corporate transactions such as capital raisings and advisory services.
ASIC's report Sell-side research and corporate advisory: Confidential information and conflicts (see: REP 486) released in August 2016 sets out key observations from a review of the way financial intermediaries handle material, non-public information and manage conflicts of interest. It considers the interaction between financial intermediaries’ research and corporate advisory activities.