ASIC’s huge week of fines, freezes and jail

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The urgent freezing of the bank accounts of an oil and gas giant, overseeing a hotelier jailed, and a series of fines of up to $55,000 were all in a week’s work for ASIC.

On Friday the Australian Securities and Investments Commission (ASIC) obtained an urgent injunction to freeze the bank accounts of Sino Australia Oil and Gas Ltd (SAO).

The orders, which ASIC obtained in Melbourne’s federal court, were sought following concerns that SAO might transfer funds that were raised in 2013 by an initial public offering (IPO) for purposes that were not disclosed in the IPO prospectus.

The injunction restrains the ASX listed entity from transferring company funds from two accounts it holds with HSBC Bank Australia prior to the hearing, which is today: watch this space.

The orders also stop three other respondents – Tianpeng Shao (SAO’s executive chairman), Ruiyu He and Hayan Wang from taking any steps to cause or facilitate the transfer of any funds out of the bank accounts.  

ASIC has concerns that the corporation might transfer funds to a Chinese bank account that is operated by unrelated people. The resolutions passed at an extraordinary general meeting at the end of February to suddenly appoint He and Wang to the board may also be invalid, it asserts.

The injunctions aim to protect the shareholder funds of nearly $13 million that were raised under the IPO.

In other news, the former CEO of West Australian hotel chain Compass Hotel Group, has been jailed for longer after an ASIC investigation and Crown appeal.

Brian Northcote pleaded guilty to charges of having breached his duties as a company director by dishonestly withholding information from the CHGL board and using his position to gain a financial advantage.

At the appeal, Northcote was re-sentenced to a term of imprisonment of three years and six months – almost double his initial two year sentence.

ASIC also issued fines of up to $55,000 to four separate companies this week.

Two Victorian public companies have been fined and convicted for failing to prepare and lodge financial reports to ASIC and to hold Annual General Meetings.

The ATF Group was fined a total of $7,500, while Mi Media Holdings was slapped with $9,500.

“These matters demonstrate ASIC’s ongoing focus of ensuring companies uphold their reporting responsibilities,” commissioner Greg Tanzer said.  “Not adhering to these responsibilities severely compromises the transparency of a company and limits shareholders’ ability to make informed decisions. These obligations are important and ASIC will not hesitate to pursue companies who disregard them.”

In a larger bust, Instinet Australia Pty Limited has just paid a penalty of $50,000 to comply with an infringement notice given to it by the Markets Disciplinary Panel (MDP).

The penalty was for the entry of an erroneous order which resulted in the market for Renison Consolidated Mines NL March 2012 convertible notes not being both fair and orderly.

For a similar reason, Commonwealth Securities Limited has just paid a slightly larger penalty of $55,000 after a MDP infringement notice.


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