ASIC has cancelled Melbourne based retail OTC derivative issuer, Berndale Capital Securities Pty Ltd’s (Berndale) Australian Financial Services (AFS) licence.

ASIC has also banned Stavro D’Amore, of Middle Park, Victoria, a former director of Berndale, from providing financial services for a period of six years. Mr D’Amore was the sole responsible manager and key person on the AFS licence.

Following an administrative hearing, ASIC found that Berndale:

• failed to take reasonable steps to ensure that its representative complied with financial services laws;
• failed to have adequate financial and human resources;
• failed to maintain an appropriate internal dispute resolution system;
• failed to provide financial services efficiently, honestly and fairly;
• failed to comply with the client money reporting requirements;
• failed to lodge annual financial statements, and audit reports; and
• is likely to contravene its general obligations as an AFS licensee.

ASIC also found Mr D’Amore:

• was involved in contraventions of financial services laws by Berndale;
• is not adequately trained, or is not competent, to provide financial services; and
• is likely to contravene a financial services law.

‘AFS licensees must ensure that they comply with their reporting, competence and resourcing obligations. If an AFS licensee chooses to allow other entities to operate under its license, ASIC expects that the licensee will ensure that the representatives are not providing unlicensed financial services and are properly monitored. ASIC will take decisive regulatory action to address this type of misconduct to prevent investor harm’, ASIC Commissioner Cathie Armour said.

To minimise the impact of the cancellation on past and current clients of Berndale, the cancellation will be subject to a specification that the AFS licence continues until 20 December 2018 for the purpose of finalising existing client trading accounts.

Further, Berndale’s AFS Licence continues until 23 May 2019 for the purpose of having a dispute resolution scheme in place to resolve any disputes with the Australian Financial Complaints Authority (AFCA); and to resolve any applicable compensation requirements including professional indemnity insurance.

Berndale and Mr D’Amore each has the right of review to the Administrative Appeals Tribunal (AAT) in respect of ASIC’s decision.

Background

Berndale Capital Securities Pty Ltd: ACN 113 616 032

AFS Licence: 290108

The AFCA has replaced the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal.

Editor's note:

Berndale has applied to the AAT in respect of ASIC’s decision to cancel its AFS licence. The first directions hearing is scheduled for February 2019.

Editor's note 2:

Following a directions hearing on 11 February 2019, the matter will next be before the AAT for a further directions hearing on 15 March 2019.

Editor's note 3:

At the directions hearing on 15 March 2019, a further directions hearing was set for 9 May 2019. ASIC is to file its Statement of Facts, Issues and Contentions by 2 May 2019.

Editor's note 4:

On 4 October 2019, the AAT dismissed Berndale’s application for review of ASIC’s decision to cancel its licence following withdrawal of the application by Berndale.