What caused ASIC to suspend the AFS license of Investors Exchange Limited? The Australian financial regulator states that the firm failed to meet its obligations.
February 5, 2021 | AtoZ Markets – The Australian Securities and Investments Commission (ASIC) on Friday announced suspending the Australian financial services (AFS) license of Investors Exchange Limited (IEL) for a period of six weeks, effective January 15, 2021.
Why ASIC Suspended the AFS License of Investors Exchange Limited
According to ASIC, Investors Exchange Limited has held AFS license number 299024 since August 9, 2006.
However, IEL license was suspended because over failure to comply with financial services laws and maintain competence to provide the financial services covered by its AFS license.
To be specific, Investors Exchange Limited:
- failed to lodge its annual financial statements and auditor reports by the requisite date for the financial years ending 2014, 2016, 2017, 2018 and 2019;
- failed to lodge the compliance plan auditor’s reports for Investors Exchange Investment Fund by the requisite date in 2014 and 2016, and for both Schemes by the requisite date in 2017, 2018 and 2019; and
- failed to comply with the compliance plan for Dean Capital Property Trust No. 1 in 2012; and
- issued defective product disclosure documents in 2018 and 2019 (refer 18-274MR, 19-217MR).
The suspension will allow IEL time to review its competence and take steps to ensure compliance with its obligations as an AFS licensee. ASIC has used its power under s915H of the Corporations Act to allow IEL to provide financial services that are reasonably necessary for the day-to-day operation of the Schemes while the suspension is in place. During the suspension, IEL cannot issue new interests in the Schemes. IEL is also specifically prohibited from:
- granting any further security over the existing assets of the Schemes; and
- offering redemption of interests in the Schemes unless this is offered equally to all Scheme members.
Under the Corporations Act, ASIC may suspend or cancel an AFS license if the licensee fails to meet its obligations under s912A. This includes the obligation to hold membership in a dispute resolution system.
Nevertheless, IEL has a right to seek a review of ASIC’s decision at the Administrative Appeals Tribunal.
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