As regulatory scrutiny ramps up across areas like greenwashing, corporate misconduct and disclosures, 2024 has proven to be a busy year for the corporate regulator.
InvestorDaily has compiled some of these significant events which involve banks, super funds, and even crypto firms.
January
The year began with Westpac hit with a maximum penalty of $1.8 million in relation to a $12 billion interest rate swap transaction in October 2016, the largest of its kind in Australian financial market history.
The Federal Court has ruled that the bank engaged in unconscionable conduct during pre-hedging for an interest rate swap transaction with a consortium of AustralianSuper and IFM, aimed at managing interest rate risk from their purchase of a 50.4 per cent stake in Ausgrid. The consortium sought the swap to convert their variable interest rate borrowing into a fixed rate, protecting against potential rate increases.
February
The following month, ASIC won its first crypto-related case in court after the Federal Court found fintech company Block Earner engaged in unlicensed financial services conduct when offering its crypto-backed Earner product to retail investors.
The court later relieved Block Earner from liability to pay a penalty for the contraventions, and ASIC has since appealed the decision.
March
Finder Earn, the cryptocurrency subsidiary of Finder, also came under ASIC’s radar, with the regulator alleging the service was a debenture because customers were led to believe they would be repaid and given a return for allowing the company to use their capital. The Federal Court ultimately dismissed the proceedings, because the watchdog was unable to establish Finder Earn was a debenture.
Marking ASIC’s first greenwashing court victory, the Federal Court also ruled in March that Vanguard broke the law by making misleading claims about certain environmental, social and governance (ESG) exclusionary screens applied to investments in an index fund run by the firm. The fund manager was later penalised $12.9 million.
April
In April, ASIC filed civil proceedings against three blockchain mining companies NGS Crypto, NGS Digital, and NGS Group and their sole directors. It alleged the companies target Australian investors to invest in blockchain mining packages with fixed-rate returns, encouraging them to use funds transferred from regulated super funds to self-managed super funds (SMSFs) and then converted into cryptocurrency.
Also in April, the Federal Court ordered Macquarie Bank to pay a penalty of $10 million for failing to have effective controls to prevent and detect unauthorised fee transactions conducted by third parties, such as financial advisers, on customer cash management accounts using Macquarie’s bulk transacting facility.
May
In a first of its kind ruling, the Federal Court found crypto payment facility BPS Financial guilty of engaging in unlicensed conduct related to its ‘Qoin Wallet’, a non-cash payment facility utilising the crypto-asset token ‘Qoin’.
The same month, ANZ confirmed it was under investigation by ASIC for its execution of a 2023 issuance of 10-year Treasury Bonds by the Australian Office of Financial Management (AOFM).
JP Morgan Securities Australia Limited also came under regulatory scrutiny, receiving a $775,000 penalty from ASIC’s Markets Disciplinary Panel for allowing suspicious client orders to be executed on the ASX 24 futures market.
June
The Federal Court found LGSS Pty Limited, trustee of Active Super, contravened the law in connection with various misleading representations concerning its ESG credentials.
July
The new financial year commenced with four banks – ANZ, Bendigo and Adelaide Bank, Westpac, and CBA – facing criticism for systematically imposing high fees on vulnerable Australians.
The banks were ordered to refund almost $30 million to low-income customers after an ASIC review found they were systemically charging high fees to those customers who could least afford it.
Also in July, ANZ admitted “unacceptable failure” amid the AOFM bond investigation.
August
Mercer Super was ordered to pay an $11.3 million penalty in early August by the Federal Court, following its admission it made misleading statements about the sustainable nature and characteristics of some of its superannuation investment options.
ASIC commenced proceedings in the Federal Court against the ASX in August, over allegations the stock exchange made misleading statements related to its Clearing House Electronic Subregister System (CHESS) replacement project.
Additionally, the regulator won its case against global crypto exchange operator Bit Trade Pty Ltd for design and distribution failures that allegedly cost customers just under $13 million.
September
Macquarie Bank was hit with a record penalty of $4.995 million for serious market gatekeeper failure. Following an ASIC investigation, the Markets Disciplinary Panel (MDP) fined the bank for failing to prevent suspicious orders being placed on the electricity futures market.
October
Most recently, ANZ failed to rid itself of a finding it breached continuous disclosure laws during a 2015 bid to raise $2.5 billion, with the Federal Court upholding the ruling.
