Australian authorities charge Societe Generale Securities with breaching client money obligations

The Australian authorities have brought criminal charges against Societe Generale Securities Australia Pty Ltd (SGSAPL), a provider of financial services in equity derivative sales, prime services and clearing, as well as financial products including ASX24 futures and options and OTC derivatives.

On March 17, 2020, the company appeared in the Downing Centre Local Court in Sydney on criminal charges, including two counts of failing to pay client money into segregated authorised bank accounts and two counts of failing to comply with requirements relating to a client money bank account.

The maximum penalty for each of the charges is 250 penalty units, approximately $45,000.

Let’s note that, according to Australian laws, ‘Client Money’ is:

• money paid to a financial services licensee in connection with a financial service that has been provided, or will or may be provided, or
• money paid to a licensee in connection with a financial product held by a person.

An AFS licence holder must ensure that client money is paid into a client money account. Such an entity is only permitted to make payments out of a client money account as specified by the Corporations Regulations. Client money provisions aim to protect the interests of clients of AFS licensees by separating client money from money belonging to licensees.

The Australian Securities & Investments Commission (ASIC) alleges that between December 2014 and September 2018, the company failed to comply with client money obligations, in contravention of criminal offence provisions under sections 993B(1) and 993C(1) of the Corporations Act 2001 (the Act).

The Commonwealth Director of Public Prosecutions is prosecuting the matter, which has been adjourned for a Case Management Hearing on May 12, 2020.