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19-147MR AAT upholds ASIC ban of client adviser for trading in ‘MINI’ warrants
The Administrative Appeals Tribunal (AAT) has affirmed ASIC’s decision to ban Mark Menzies, the sole director and officer of Menzies Securities Pty Ltd (Menzies Securities) from providing financial services.
ASIC banned Mr Menzies for a period of four years, expiring on 28 January 2022. In its decision the AAT determined that the ban be varied to expire on 31 December 2020.
ASIC’s decision to ban Mr Menzies followed an investigation that found that he had engaged in manipulation of the price of MINI warrants issued by Credit Suisse, commonly called ‘MINIs’, through engaging in pre-arranged trades for the sole or dominant purpose of transferring a profit or loss from previous transactions (18-105MR). MINIs are a derivative product traded on the ASX.
The AAT found that Mr Menzies had contravened s.1041A of the Corporations Act 2001 and noted that ‘for the holder of an Australian Financial Services licence to be involved in a breach of s.1041A of the Act, conduct which involved market manipulation, is very serious, and such as to merit a banning order in both the public interest and in order to deter others from embarking upon such activity, and also to encourage confidence in the market and its operators.’
The AAT also found that Mr Menzies had failed in his duty to ensure that Menzies Securities retained all necessary records of client instructions in accordance with the Corporations Regulations 2001.
On 22 February 2018, ASIC cancelled the Australian financial services licence of Menzies Securities (AFSL 340198) at the request of Mr Menzies.
A MINI is a type of 'derivative' in that it derives its value from another 'thing' which is commonly referred to as the 'underlying instrument' or 'reference asset'. The underlying instrument of a MINI may be, among other things, a share, a share price index (including the S&P/ASX 200 Index), a pair of currencies or a commodity.
ASX SPI 200 Index Futures (SPI Futures)are a derivative product which tracks the value of the S&P/ASX 200 Index.
Credit Suisse ceased issuing MINIs on ASX in October 2013.
In December 2017 the AAT affirmed ASIC’s decisions to ban a former financial adviser, Tony Davidof, and former Credit Suisse employee, Philip McLean from providing financial services for three years (17-425MR).
In separate decisions, the AAT found that Mr Davidof and Mr McLean had contravened s1041A of the Corporations Act 2001, by manipulating the price of MINI warrants issued by Credit Suisse through engaging in pre-arranged trades for the sold or dominant purpose of transferring a profit or loss from previous transactions.