CommSec fined $200k for allowing trading in dead client's account
Clancy Yeates
16 November 2016
CommSec has paid a $200,000 fine for allowing the relative of a deceased client to trade shares on the dead person's online account for months after the broker was told about the client's death.
The failure to lock the dead client's online share-trading account was revealed by the corporate regulator, as it also highlighted broader problems in CommSec's handling of deceased estates.
The Australian Securities and Investments Commission on Wednesday pinged the Commonwealth Bank-owned stockbroker for breaching rules that prohibit brokers from making trades on behalf of clients unless they have instructions from the client, or from someone authorised by them.
It said that in March 2014, CommSec was told that a client who held a share-trading account and margin loan account had died.
However, the bank failed to lock either of these accounts, because the bank's deceased estate policies were not being properly implemented.
Over the next seven months, a family member was able to make 59 trades on behalf of the deceased client through CommSec's online portal, ASIC said.
The family member had not been authorised to make any of these share trades, though they were authorised to trade on the margin loan account in the event of a margin call.
ASIC's markets disciplinary panel [MDP] viewed the incident as a breach of the Corporations Act, slapping the bank with a $200,000 fine.
Commonwealth Securities Limited (CommSec) says it is still committed to providing secure services to customers after receiving a $200,000 infringement notice penalty from the Australian Securities and Investments Commission (ASIC) for violating market integrity rules.
16 November 2016
http://www.moneymanagement.com.au/news/policy-regulations/commsec-responds-200k-asic-fine
The Commonwealth Bank's (CBA's) stockbroking firm was issued the notice from ASIC on the grounds of having contravened two rules relating to supervisory policy implementation in a case regarding the mismanagement of the accounts of a client who died in early 2014.
Between March and October of 2014, CommSec entered into 59 market transactions on behalf of the deceased client on its online trading portal. Although on the instructions of an authorised relation of the deceased client, the family member was not authorised to provide instructions to enter into any of the market transactions.
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A statement from CommSec managing director, Paul Rayson, said that the firm would work to increase compliance measures in the wake of the infringement.
"We acknowledge and regret this process error; our processes have since been updated to ensure compliance," he said.
"We have worked collaboratively with ASIC on this matter... our customer and regulatory responsibilities are of paramount importance."
CommSec self-reported the error in 2014, after it was found that the restructure of the deceased's estate had resulted in a backlog of work after the firm failed to apply a holder record lock to the two accounts of the deceased client following a formal notification of the death.
The infringement noticed was lodged on 19 October