ASIC has banned a Sydney man from engaging in financial services for five years for misleading or deceptive conduct but, as his investors lose out on $12.5m, financial advisers have questioned whether the regulator’s actions are harsh enough.
West Pennant Hills-based Leigh Barker received the five-year ban after ASIC found that he made false or misleading statements and engaged in misleading or deceptive conduct.
“Barker is the sole director of Tangible Assets Financial Services Pty Ltd, Tangible Assets Pty Ltd and TATL Pty Ltd (formerly Tangible Assets Trading Pty Ltd) (in liquidation),” said an ASIC statement.
The regulator found that Barker and his companies promoted to investors a 'parallel imports business', which it was claimed were operated by TATL, offering investors a return of 15% every three months. According to ASIC, a parallel imports business involves purchasing goods in one country and exporting the goods to a buyer in another country.
“Mr Barker, Tangible Assets Financial Services and Tangible Assets distributed promotional material and made verbal statements that clearly suggested TATL operated the parallel imports business. This material suggested that investors' funds would be applied to acquire a portion of goods of a particular shipment. The shipments usually consisted of supermarket, household and toiletry items,” said ASIC.
“ASIC’s investigation found that TATL did not carry on a business of parallel importing. Instead, Mr Barker pooled the money invested in TATL and invested it in a parallel imports business purportedly run by another company, Reseau International Trading Pty Ltd.”
Reseau International Trading collapsed in June 2010, leaving more than 200 investors $12.5m out of pocket, while the company’s creditors were owed around a cool $86m.
Tangible Assets Financial Services voluntarily cancelled its Australian financial services licence in August 2011. Barker has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC’s decision.
The news comes in the wake of a South African financial adviser receiving a 15-year jail sentence for stealing approximately $700,000 from the savings and retirement nest eggs of his so-called “unsophisticated” clients – a story that led planners to take to the Wealth Professional online forum to vent their frustration at the severity of punishments that are doled out to fraudsters in Australia.
Mark Thompson, for example, wrote that “you steal a $50,000 car in this country and you go to prison, but if you defraud people of $500,000 you get suspended sentence and a bag of hot peppermints”.
Meanwhile, a reader going by the name of Innocent Observer claimed that theft or intentional fraud should carry a mandatory jail term:
“Maybe not 15 years, but if crooked operators knew there was a minimum 6 months (for example) jail term waiting around the corner if they dared even consider dipping their hands into clients' pockets I think we would see less "white collar" crime.”
“What is the point of being one of the most compliant countries in the world in terms of regulation, etc. in the financial services space when the consequences of ill action by some is not enough to deter such action,” added MG. “Australia needs to take a similar path as that of South Africa in order to eradicate such behaviour. The integrity of our industry is largely dependent on honesty – without it, we might as well pack it in.”
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