The managing director of Professional Investment Holdings (PIH) has dismissed suggestions the firm is facing a potential enforceable undertaking (EU) from ASIC.
An ASIC spokesperson declined to comment on speculation the regulator is in talks with PIH over an EU.
PIH managing director Grahame Evans denied the firm was facing an EU, saying the suggestion might have been confused with the group's ongoing involvement with ASIC.
The company's June 2010 audited financial statements released on 30 September stated its dealer group, Professional Investment Services (PIS), was subject to ASIC's ongoing surveillance during the year ending 30 June 2010.
"Subsequent to year end, PIS is negotiating with ASIC a framework by which PIS will address matters that have been raised by ASIC, which may include mechanisms to rectify the matters," PIH said in a statement.
"The directors have made provision in the budgets and cash-flow forecasts for the year ending 30 June 2011 for the potential increase in compliance costs. The financial effect of this subsequent event has not been brought to account at 30 June 2010."
According to the firm's auditor report from KPMG, a number of legal claims and financial breaches by PIS had placed financial pressure on the group.
The report said the firm would achieve its projected cash flow and continue as a going concern if it was not hit with any client claims or other legal proceedings; if PIS continued to hold its licence and was not impacted on by regulator investigations; and if the Centrepoint Alliance merger went ahead.
"The directors of the company are of the view that each of these critical assumptions can be achieved and accordingly that the group will be able to continue as a going concern," the report said.
"If the critical assumptions are not achieved and additional funding is required within the next 12 months, the directors intend raising additional debt or equity finance, however, there is an inherent uncertainty whether this alternative funding could be raised."
In September, PIH underwent a series of internal changes that separated its dealer group and its group product and platform offerings.
The move was part of the group's push to manage any potential conflicts between product and advice ahead of its planned merger with listed firm Centrepoint Alliance.
The planned restructure will also involve role changes and some redundancies following an internal review of operating expenses.
Under the changes, the Associated Advisory Practices and Australian Loan Company businesses will now report to PIH.
PIH announced the first step of its restructure process earlier this year with the appointment of David Johnstone as chief executive officer of PIS.
