ASIC Fines SGSAPL $30000 for Breaching Client Money Obligations

Societe Generale Securities Australia Pty Ltd (SGSAPL) recently has been fined a total of $30000 on charges brought by Australian Securities and Investments Commission (ASIC) for four separate counts breaching client money obligations.

Specifically, SGSAPL was fined $15,000 for failing to deposit two counts of money into an Australian Authorised Deposit-taking Institution (ADI) or an approved foreign bank as required under s993B(1) of the Corporations Act (the Act).

The first count took place between 8 December 2014 and 8 February 2017, when SGSAPL withdrew client money on approximately 4,636 occasions from the Australian client-segregated accounts and deposited the monies in client accounts held with Societe Generale S.A., Hong Kong branch. The accounts held by Societe Generale S.A. Hong Kong were not held with an Australian ADI nor an approved foreign bank.

The second count took place between 30 December 2014 and 8 February 2017 when SGSAPL deposited client money into five overseas non-ADI bank accounts on approximately 7,363 occasions.

SGSAPL was fined $15,000 for a further two counts of breaching s993C(1) of the Act, through making payments out of a client money account that were not permitted by regulations 7.8.02 of the Corporations Regulations (the Regulations).

Count three related to 20 occasions between 27 January 2017 and 9 January 2018, in which part of SGSAPL’s daily intercompany margin call/reconciliation process included withdrawing approximately $496,777,226 in client money from client segregated accounts.

Count four took place Between 1 January 2015 and 22 September 2016, when a total of approximately AUD $144,000 in bank fees and charges was improperly withdrawn from the client-segregated accounts.

ASIC Commissioner Cathie Armour commented on the decision, “The protection of client funds is critical to investor confidence and market integrity. The law is very clear about the uses of client money to provide certainty and transparency for clients and licensees. Breaches of these requirements are a serious compliance failure.”