ASIC has announced that it has finalised its inquiries into allegations made against I.O.O.F. Holdings Limited and its subsidiaries (IOOF) by a former employee of IOOF about insider trading and licence breaches.
ASIC’s inquiry ran parallel to the Senate Economics Committee Scrutiny of Financial Advice inquiry which lapsed with the calling of the 2 July Federal election. The Senate inquiry heard evidence from whistleblowers and others involved in Commonwealth Financial Planning, CommInsure, IOOF and Macquarie.
Insider trading
Some of the allegations concerned an IOOF staff member’s involvement in insider trading when they traded in securities prior to the release of IOOF research reports relating to those securities. He also claimed that he plagiarised material with respect to research reports he produced at Bridges Financial, an IOOF subsidiary.
ASIC’s review determined that the release of the research reports had no material effect on the price of the relevant securities and there was no other evidence to warrant the commencement of a formal investigation or to take no further action in relation to these allegations.
Licensee breaches and corporate governance
ASIC’s inquiries also included a review into allegations relating to corporate governance and licensee breaches by IOOF. This review identified a number of concerns relating to IOOF’s compliance arrangements, breach reporting, management of conflicts of interest, staff trading policy, disclosure, whistleblower management and protection and cyber security. ASIC advised IOOF that in its view the corporate culture at that time within IOOF contributed to these issues occurring.
Concurrent with ASIC’s inquiries, IOOF appointed PricewaterhouseCoopers to conduct an independent review of its regulatory breach reporting policy and procedures and the control environment within its research team. IOOF has made significant changes to their policies and procedures as a result.
In addition to the PWC review, ASIC and IOOF agreed that IOOF will engage an external compliance consultant to conduct an expanded, broader and more comprehensive review of compliance arrangements within all IOOF business units. ASIC says that it will continue to monitor and work cooperatively with IOOF and its board to ensure the necessary changes are properly effected.
