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Friday 10 March 2017

17-058MR ASIC permanently bans former Morgan Stanley Wealth Management financial adviser from providing financial services

ASIC has permanently banned Andrew Peter Panayiotides from providing financial services.

ASIC found that Mr Panayiotides failed to act in the best interests of clients and provided advice to clients of Morgan Stanley Wealth Management in relation to exchange traded options (ETOs) that was inappropriate when considering the financial circumstances and objectives of the clients involved.

Mr Panayiotides' conduct resulted in each of the client's superannuation accounts being significantly exposed to short cash covered ETO positions that were contrary to the risk profile declarations provided by the clients.

ASIC also found that Mr Panayiotides knew, or ought reasonably to have known, that there was a conflict of interest between the financial benefit Mr Panayiotides received, in the form of brokerage, from the numerous ETO transactions he advised clients to enter into and his clients' best interests, and that he failed to give priority to his clients' interests.   

ASIC further found that Mr Panayiotides:

  • improperly made payments into clients' bank accounts using his own funds;
  • issued a false invoice;
  • provided unethical advice to a client in relation to a superannuation fund withdrawal; and
  • entered into a personal loan arrangement with a client in return for offering reduced brokerage while at another firm.

In considering Mr Panayiotides' conduct, which was not of an isolated nature, was not inadvertent and occurred over a long period of time in which clients incurred significant losses, ASIC had reason to believe that Mr Panayiotides was likely to contravene a financial services law in the future and was not of good fame or character. 

ASIC Commissioner Cathie Armour said, 'Financial advisers are expected to act in the best interests of clients. ASIC will ensure appropriate enforcement action is taken against advisers who fail in this duty.'

Mr Panayiotides has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC's decision.

Background

ETOs are a type of derivative that are considered high risk investments.  A call option is the option to buy the underlying shares whereas a put option is the option to sell the underlying shares. Selling options to open a position is a high risk strategy in which the potential for losses is unlimited in the case of a sold call. 

Mr Panayiotides was employed by Morgan Stanley Wealth Management between January 2013 and May 2015.

Editor's note:

On 7 April 2017, Mr Panayiotides lodged an application for review of ASIC’s decision in the Administrative Appeals Tribunal.

Editor's note 2:

On 14 August 2019, the Administrative Appeals Tribunal varied ASIC’s banning decision so that the period of banning was reduced to 5 years. The banning period will expire on 6 March 2022.

Last updated: 15/08/2019 06:06