ASIC Initiates Court Proceedings Against State One for Compliance Failures

The Australian Securities and Investments Commission (ASIC) has initiated court proceedings against State One Stockbroking for failing to comply with two of ASIC’s Market Integrity Rules (MIRs), and for non-compliance with an infringement notice served by the Markets Disciplinary Panel (MDP).

ASIC has alleged that State One made bids on behalf of a client between 1 – 2 March 2011 in circumstances in which the company should have suspected that its client placed the orders with the intention of creating a false or misleading appearance with respect to the market or price of stock.

ASIC also alleges that between 10 February and 9 May 2011, State One failed to provide clear guidance to its employees responsible for reviewing post-trade alerts on what to do in the event of receiving post-trade alerts.

Background: MDP Decision

The MDP gave an infringement notice to State One on 31 March 2016 for failing to comply with the MIRs. State One did not comply with this infringement notice.

The MDP found that State One contravened several subsections of the Corporations Act and specified that a total penalty of $425,000 should be paid in the infringement notice.

Allegation Only

The serving of an infringement notice to State One is only an allegation that it has contravened the relevant subsections of the Corporations Act.  While ASIC cannot enforce an infringement notice, it can bring civil penalty proceedings against the recipient in the case of non-compliance.

Hence, ASIC is seeking declarations that State One contravened the stated subsections of the Corporations Act. It orders that State One pay the specified pecuniary penalties and is looking to recover its legal costs should it be successful in the proceedings.

Markets Disciplinary Panel

Since August 2010 the MDP has issued 51 infringement notices in relation to alleged contraventions of the market integrity rules, of which 50 have been complied with. The remaining notice is the one discussed here.

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