ASIC Enforcement Wrap: May 2025

Key May Takeaways:

• ASIC sues Macquarie for failing to report volume of short sales, underlining the importance of short sale data to an informed market and the Regulator.
• Credit licensees should closely examine their approach to hardship applications, following ASIC targeting Resimac in civil penalty proceedings for an alleged ‘one size fits all’ approach.
• ASIC imposes additional licensing conditions on two firms, Macquarie Bank and Kalkine Pty Ltd, highlighting an alternative option in ASIC’s regulatory toolbox.

‍Spotlight– Authorised representative arrangements not a panacea licensing issues

The Full Federal Court has found in favour of ASIC finding that BPS Financial Pty Ltd (BPS) cannot rely on the ‘authorised representative’ exemption when issuing the “Qoin Wallet” non-cash payment facility (Qoin NCP Product).

“Qoin” is a digital currency or crypto-asset, where transactions were undertaken through the “Qoin Wallet”.

BPS was the authorised representative of PNI Financial Services Pty Ltd (PNI) between 5 November 2020 and 30 August 2021.

The Primary Judge held in the Federal Court that BPS had not carried on a financial services business without an Australian financial services licence (AFSL) by issuing the Qoin NCP Product, as it was exempt from this requirement while being an authorised representative of PNI.

ASIC appealed this, with the appeal upheld by the Full Federal Court.

The decision turned on the issue of whether BPS was acting in its capacity as an authorised representative of PNI in issuing its Qoin NCP Product.

The Full Court noted that not every act of an authorised representative in providing a relevant financial service is provided in their capacity as an authorised representative. Whether the authorised representative’s conduct is in that capacity will depend on the particular facts of the case.

The Full Court found the evidence established that BPS was not issuing the Qoin NCP Product in its capacity as a representative of PNI but was doing so in its own right.  For example, BPS had developed the Qoin NCP Product before it had any dealings with PNI. Further to this, the relevant documents relating to the Qoin NCP Product were prepared and issued by BPS before any of its dealings with PNI. Thus, the Court concluded that BPS was acting on its own behalf and not as are presentative of PNI when issuing the Qoin NCP Product, requiring BPS to hold an AFSL per s 911A(1).

ASIC’s successful appeal demonstrates that unlicensed financial services will not be ‘cured’ by subsequent entry into an authorised representative arrangement. If relying on the authorised representative exemption, the authorised representative must make clear to its customers that it is providing such financial services as a representative of the AFS Licensee, and not in its own right.  

New businesses intending to provide financial services should be aware of the principles from the BPS decision and make proper arrangements to obtain its own AFSL or enter into an appropriate authorised representative arrangement before providing any such financial services.

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May in Summary – Enforcement Actions and Outcomes

Civil Action:

Civil Proceedings Commenced

ASIC commenced four civil proceedings:

• In ASIC’s first case concerning short sale reporting, ASIC has commenced proceedings against Macquarie Securities (Australia) Limited (MSAL) in the NSW Supreme Court for allegedly misreporting millions of short sales to the market operator. ASIC alleges that between 11 December 2009 and 14 February 2024, MSAL failed to report the volume of short sales by at least 73 million, further alleging that the conduct occurred due to multiple systemic issues which allowed the underreporting to remain undetected for over a decade. Short sales data is important as it informs investors, governments and regulators about market sentiment, integrity, and potential risks.
• In ASIC’s first case against a credit licensee for alleged ‘one size fits all ‘ failures in their approach to hardship applications, ASIC commenced civil penalty proceedings in the Federal Court against Resimac Limited. ASIC alleges that Resimac, in response to hardship applications from home loan customers, imposed a ‘one size fits all’ approach. Resimac allegedly requested extensive standard information from vulnerable customers without considering the reasonableness of the request in light of their individual circumstances. Additionally, ASIC claims that when vulnerable customers did not provide any of the standard information, Resimac rejected their application. ASIC alleges that this conduct contravened Resimac’s obligation as an Australian credit licensee to act efficiently, honestly, and fairly.
• ASIC has commenced proceedings in the Federal Court against Walker Stores Pty Ltd, trading as Snaffle, alleging that between September 2021 and February 2025, Snaffle entered into thousands of credit contracts where it charged consumers significantly more than it was permitted to under the National Credit Code. Snaffle’s pricing structure allegedly evaded the Annual Cost Rate, a cap on costs at 48% which can be imposed under credit contracts. ASIC claims Snaffle imposed cost and interest charges between 60% and 103%. Additionally, ASIC claims that over 40,000 credit contracts may have had a flat interest rate incorrectly applied.
• ASIC has commenced civil penalty proceedings in the Federal Court against Liang (Allan) Guo, a former director of Blockchain Global Ltd (in liquidation). ASIC alleges that Mr Guo breached his directors’ duties in relation to Blockchain Global’s cryptocurrency exchange platform ACX Exchange, specifically his dealings with customer funds, statements about those dealings, and obligations to keep proper books and records.

Civil Penalties

The Federal Court ordered civil penalties totalling $750,000 in one case:

• The Federal Court has ordered HCF Life Insurance Company Pty Limited to pay a penalty of $750,000 and make corrective disclosures on its website. The Federal Court previously found in October 2024 that a pre-existing condition term used in four policies was liable to mislead the public. In ordering the penalties, the Court found that HCF had no intention to engage in misleading conduct but should still regard its conduct as objectively serious. General deterrence was achieved by putting other insurers on notice that contractual terms may mislead consumers if those terms are inconsistent with the Insurance Contracts Act 1984 (Cth).

Appeals

• ASIC is seeking special leave from the High Court to appeal the decision of the Full Federal Court regarding Block Earner. ASIC is seeking the High Court’s ruling on what falls within the definition of a financial product. The Full Federal Court in April held that Block Earner’s product which allowed consumers to earn fixed yield returns from lending specified cryptocurrency assets was not a financial product.

Criminal:

Charges

One individual was charged with criminal offences:

• Michael Dunjey, director of Ascent Investment and Coaching Pty Ltd, was charged with 33 criminal offences comprising of 23 counts of fraudulently obtaining a benefit in relation to $4 million of investor funds under section 409 of the Criminal Code 1913 (WA), 5 counts of failing to act in good faith in relation to the use of $2.5 million under section 184 of the Corporations Act 2001 (Cth), and 5 counts of falsifying books of a company under section 1307 of the Corporations Act.

Guilty Plea

One individual pleaded guilty to criminal charges:

• Darryl Brian Mapleson pleaded guilty to one count of insider trading in the shares of Beacon Minerals Limited on 12 May 2025 at the Supreme Court of Western Australia. Rosdarem Pty Ltd and Rosdarem Investments Pty Ltd, of which Mr Mapleson was a director, acquired 6,792,850 Beacon Minerals shares while Mr Mapleson was in possession of insider information. At the time, Mr Mapleson acted as Beacon Minerals’ Competent Person for an announcement to the Australian Securities Exchange regarding drilling results.

Sentencing

Three individuals were sentenced:

• Tim Xenos, former CEO and director of FAL Healthy Beverages Pty Ltd, was sentenced to a term of imprisonment for 18 months to be served by way of an Intensive Corrections Order (ICO) with an additional condition of 200 hours of community service. The Magistrate found Mr Xenos guilty of managing a corporation while disqualified, using his position dishonestly to gain a financial advantage of $11,392, and failing to disclose his income and bank accounts to his bankruptcy trustee. Mr Xenos is also disqualified from managing corporations for five years as a result of his conviction.
• David Valvo, a former financial advisor, was sentenced to three years imprisonment, suspended upon condition that he enter a recognizance to be of good behaviour for five years, pay a penalty of $20,000 and make reparation to Oasis Fund Management Limited for reimbursement of his former clients’ losses. Mr Valvo was convicted of engaging in dishonest conduct in the course of carrying on a financial services business when he dishonestly obtained $110,000 from his clients’ superannuation accounts.
• Mark Francis McCabe, a former financial services director, was sentenced to four years and three months imprisonment with a non-parole period of two years and six months. Mr McCabe previously entered into guilty pleas for three offences of dishonestly obtaining a financial advantage by deception while a director of two companies when he made dishonest representations to investors. Instead of using investor payments for trading, Mr McCabe used the funds for his own benefit where he obtained a total financial advantage of $940,350. In sentencing Mr McCabe, the Court found that the duration of the scheme and level of sophistication in deceiving the victims meant a serious sentence was required.

Administrative action:

Licence Cancellation

Five companies had their Australian financial services (AFS) licence cancelled:

• Brite Advisors Pty Ltd had its AFS licence cancelled by ASIC on 29 April 2025 following a payment of compensation by the Compensation Scheme of Last Resort (CSLR). On 2 April 2025, the CSLR paid $21,888.20 to a person for an Australian Financial Complaints Authority (AFCA) determination which was made on 30 September 2024. ASIC imposed an additional condition on Brite Advisors for them to remain a member of AFCA for 12 months, ending on 29 April 2026.
• Thistle Financial Group Pty Ltd had its AFS licence cancelled by ASIC on 7 May 2025 after ASIC became aware that Thistle Financial Group had ceased to carry on a financial services business.
• SME Crowdfunder Pty Ltd had its AFS licence cancelled by ASIC on 2 May 2025 due to SME Crowdfunder having ceased providing financial services (it had not provided any financial services since September 2023).
• Calaite Capital Partners Pty Ltd had its AFS licence cancelled by ASIC on 5 May 2025 following a payment of compensation by the CLSR. On 2 April 2025, the CLSR made two payments totalling $267,235.57 for two AFCA determinations made against Calaite Capital on 8 July and 31 October 2024.
• Spectre Financial Group Australia Pty Ltd (Spectre) had its AFS licence cancelled after ASIC found that Spectre had failed to maintain the organisational competence to provide financial services. Spectre’s licence has been suspended since May 2024, where ASIC was concerned that if the suspension was lifted, it may put clients at an increased risk of financial loss.

Additional Licence Conditions

Two companies had additional Australian financial services (AFS) licence conditions imposed:

• Macquarie Bank Limited is required to prepare a remediation plan to address failures in their futures dealing business and over the counter (OTC) derivatives trade reporting functions, appoint an independent expert to review the adequacy of the remediation plan, and have the expert assess the operational effectiveness of the remediation activities. This follows multiple and significant compliance failures by Macquarie’s futures dealing business and OTC derivatives trade reporting. ASIC Commissioner Simone Constant said that the failures were caused by ineffective supervision and management.
• Kalkine Pty Limited is required to appoint an independent compliance consultant following an investigation by ASIC. The consultant is required to review, assess, and report to ASIC on whether Kalkine’s interactions with customers are compliant. The additional licence conditions follow ASIC’s concerns that Kalkine’s customer service representatives were giving unlicensed advice, specifically personal advice, to customers. Kalkine’s AFS licence allows it to provide general advice only.

Banning

ASIC permanently banned one individual:

• Neville Allan Kendrick has been permanently banned by ASIC from 22 April 2025 from providing any financial services and carrying on a financial services business. ASIC found that Mr Kendrick provided financial services while unlicensed or unauthorised, made materially misleading statements to induce investors, and acted dishonestly by making false statements.

Infringement Notices

ASIC issued three infringement notices to two companies:

• ASIC issued two infringement notices totalling $37,560 to Zurich Australia Limited, which were paid on 8 May 2025. ASIC alleged that Zurich made false or misleading statements to two policy holders when it declined trauma insurance claims on the basis that the particular medical conditions were excluded from the policy. ASIC alleged that the policy terms were applicable to the two policy holders, who were therefore entitled to a benefit payment. Following an internal review, Zurich paid the policy holders with interest and reported the matter to ASIC.
• ASIC issued one infringement notice of $18,780 to Australian Retirement Trust Pty Ltd (ART) for allegedly publishing misleading performance data on its website. Between July 2023 to July 2024, ART published out of date performance data about its default MySuper product, the Lifecycle Investment Strategy, which may have led consumers to believe the Strategy product was performing better than it was. ART’s website displayed performance figures for the financial year ending June 2022 instead of the financial year ending June2023, which was lower.

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If any of the above is relevant to you or you want to know more, please feel free to get in touch.

The contents of this article do not constitute legal advice and it is not intended to be a substitute for legal advice and should not be relied upon as such.  It is designed and intended as general information in summary form, current at the time of publication, for general informational purposes only.  You should seek legal advice or other professional advice in relation to any particular legal matters you or your organisation may have.