AAT upholds ASIC bans of client advisers for trading in MINI warrants


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The Administrative Appeals Tribunal (AAT) has affirmed ASIC’s decision to ban a former financial advisor, Tony Davidof, and former Credit Suisse employee, Philip McLean from providing financial services for three years.

ASIC’s decision to ban Mr Davidof and Mr McLean followed an ASIC investigation that found both had engaged in manipulation of the price of MINI warrants issued by Credit Suisse (commonly called ‘MINIs’) through engaging in pre-arranged trades for the sole or dominant purpose of transferring a profit or loss from previous transactions. MINIs are a type of derivative product traded on the ASX.

In separate decisions, the AAT noted the seriousness of the breach of the market manipulation provisions by both Mr Davidof and Mr McLean.

Market manipulation is prohibited in order to further the objects of promoting confident and informed decision making by consumers of financial products and services, and fair, orderly and transparent markets for financial products,’ the AAT said.

The AAT found that Mr Davidof contravened s1041A of the Corporations Act 2001 and that a three-year ban was appropriate in the circumstances. The AAT noted that ‘Mr Davidof was aware…that the forces of supply and demand did not govern the impugned transactions. He admits that they were designed only to transfer a profit or loss arising from other transactions.’

The AAT found that Mr McLean had also contravened s1041A of the Corporations Act 2001 and that a three-year ban was appropriate.

The AAT noted that Mr McLean’s ‘experience and level of training and knowledge and involvement in the impugned transactions should…have alerted him to the likely breach of the market manipulation prohibitions.’

Background 

A MINI is a type of ‘derivative’ in that it derives its value from something else, which is commonly referred to as the ‘underlying instrument’ or ‘reference asset’. The underlying instrument of a MINI may be, among other things, a share, a share price index (including the S&P/ASX 200 Index), a pair of currencies or a commodity.

ASX SPI 200 Index Futures (SPI Futures) are a derivative product which tracks the value of the S&P/ASX 200 Index.

Credit Suisse ceased issuing MINIs on ASX in October 2013.

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AAT upholds ASIC bans of client advisers for trading in MINI warrants

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