The Australian Securities and Investments Commission today announced that Openmarkets Australia Limited has paid the largest ever fine of $4.5 million. The penalty was imposed by the Markets Disciplinary Panel (MDP) along with an enforceable undertaking in order to comply with an infringement notice.
The Aussie regulator noted that Openmarkets has a history of compliance failures which has influenced the outcome of MDP’s judgement.
Record fine
ASIC said:
This outcome sends a clear message to market participants that breaches of market integrity rules will result in substantial penalties that should not be seen as a cost of doing business.
The investigation into the broker’s operation started when ASIC surveillance identified repeated suspicious trading by a client.
On 2,011 instances, this Openmarkets client executed bid-and-ask orders simultaneously for the same security at the same price. The ASIC stated that the broker should possess a suitable system to detect the possibility of these orders being placed with the intention of manipulating trading prices or creating a deceptive impression of active trading.
Curiously, the identical Openmarkets client engaged in questionable trading activities in 2017, leading to the platform receiving an infringement notice at that time.
According to ASIC’s findings, Openmarkets lacked suitable supervisory protocols to guarantee adherence to the market integrity rules regarding suspicious trading.
ASIC further noted that the penalty imposed by MDP would have been higher but the reduced fine was due to Openmarkets entering into an enforceable undertaking and not contesting the alleged contraventions.
As part of the enforceable undertaking, the Australian broker is obligated to engage an impartial expert who will evaluate and provide a report on the deficiencies related to trade surveillance, client onboarding, and handling of client funds.
Ban on former Head of Trading
In addition to the financial penalty imposed on the company, the regulatory authority has also issued a three-year ban on Virginia Owczarek, the former Acting Head of Trading and designated trading representative (DTR) at Openmarkets, prohibiting her from offering any financial services.
ASIC stated:
ASIC found that Ms Owczarek is not fit and proper to provide financial services or to participate as an officer in the financial services industry. ASIC found Ms Owczarek, among other things, accepted a $2,000 payment from a client for stock tips and engaged in inappropriate and unprofessional communications with a client regarding SMARTs alerts. ASIC also found Ms Owczarek used personal devices for client communications, including trading instructions.
