The latest compliance issues in wealth management across Asia-Pacific.

Goldman Sachs 
ASIC has accepted a court enforceable undertaking from Goldman Sachs Australia to improve controls relating to bookbuild messaging in certain equity capital market transactions managed by the firm. 

A bookbuild is the process of generating, recording and capturing demand from potential investors for a capital raising transaction.

Following an investigation into a block trade transaction undertaken by GS Australia in relation to shares in Healthscope on 23 November 2015, ASIC had concerns about certain representations made by GS Australia to potential investors about the minimum fixed demand.

GS Australia has implemented changes to its controls and processes including to require:

- Legal or compliance approval of all bookbuild messages to be provided to potential investors in certain equity capital market transactions; and
- Compliance attendance at any sales calls at the launch of certain equity capital market transactions to provide oversight of messaging to potential investors.

Under the enforceable undertaking, GS Australia will conduct an internal review of policies, procedures, systems, controls, training, guidance and the monitoring and supervision of employees engaged in equity capital market transactions managed by GS Australia and which involve a bookbuild or underwriting process, and implement changes to address any deficiencies identified.

Following those changes, GS Australia will provide an attestation from a senior executive to ASIC that the controls are adequate and appropriate to address ASICs concerns.

GS Australia will also make a community benefit payment of AU$500,000 ($370,000).

Linchpin, Endeavour
ASIC has commenced proceedings in the Federal Court of Australia against Linchpin Capital Group and Endeavour Securities (Australia).

Linchpin and Endeavour operate two managed investment schemes. Both schemes are called “Investport Income Opportunity Fund”.

Following an investigation, ASIC alleges that:

- Linchpin is operating the scheme without holding an Australian Financial Services Licence as required by the Corporations Act;
- Linchpin has used investor funds for its own purposes without disclosing this use to investors;
- Endeavour has entered into related party transactions in contravention of the Corporations Act;
- Endeavour has failed to properly disclose those related party transactions to investors; and
- Monies invested in the schemes managed by Linchpin and Endeavour have been misapplied or misappropriated by Linchpin and Endeavour.

ASIC is seeking orders to:
- Restrain Linchpin and Endeavour from operating the schemes and providing financial services;
- Prevent Linchpin and Endeavour from dealing with assets or investor funds;
- Appoint receivers over the assets of Linchpin and Endeavour to identify and secure scheme assets;
- Wind-up Linchpin and Endeavour and the schemes; and
- Obtain declarations that Linchpin and Endeavour have acted in contravention of the Corporations Act.

The matter will be heard in the Federal Court in Brisbane on 24 July. ASIC's investigation is continuing.

ASIC
ASIC has commenced proceedings in the Supreme Court of Queensland against Brett Gordon, a former financial advisor, Refocus Financial Group, a financial planning business based on the Sunshine Coast in Queensland led by Gordon, Heather Jean Swift, Gordon’s partner; and Consultia Super, which Swift is the sole director.

Gordon and Refocus were authorised representatives of Solar Financial between 28 June 2014 and 26 August 2017. During that period, ASIC alleges that Gordon recommended that clients establish self-managed superannuation funds and then advance unsecured loans to a related company, Diverse Capital Management to undertake property development. Diverse was placed into liquidation on 18 May.

Following an investigation, ASIC alleges that:

- At least 10 clients loaned AU$1.4 million to Diverse on Gordon’s recommendation. Those funds remain outstanding;
- Gordon used funds that had been loaned to Diverse for his personal use and as working capital for Refocus;
- Swift received funds from Diverse which were applied for her personal use;
- Gordon and Refocus entered into other unsecured loan agreements to borrow funds from SMSF clients of Refocus, which have not yet been repaid; and
- Gordon has continued to provide financial services despite not being licensed to do so.

ASIC is seeking orders to:
- Appoint a provisional liquidator to Refocus and Consultia;
- Prevent Gordon and Swift from dealing with their assets; and
- Restrain Gordon from providing financial services.

The matter will be heard in the Supreme Court in Brisbane on 11 July 2018. ASIC's investigation is continuing.

Taiyo Asset Management
The Monetary Authority of Singapore has reprimanded Taiyo Asset Management Pte Ltd for being “repeatedly late” in submitting annual declarations and auditor reports, which were late by as long as two years for the financial years ending 2014, 2015 and 2016.  

MAS also scolded the firm for changes in the appointment and cessation of its director and four of its representatives, which were late by up to more than three years; and reprimanded the firm because one of its directors, Tey Eng Chee Thomas, did not discharge his duty as a director to ensure that TAMPL has adequate controls to comply with MAS’ regulations.