State One Stockbroking to pay $500,000 due to failures to comply with ASIC market integrity rules

Maria Nikolova

The failures include placing bids on behalf of a client, in circumstances where State One should have reasonably suspected that the client had the intention of creating misleading appearance with respect to the market for a stock.

The Australian Securities & Investments Commission (ASIC) has earlier today announced that State One Stockbroking Limited (State One) will pay penalties totalling $350,000 after the company failed to comply with ASIC’s Market Integrity Rules (MIRs).

The Federal Court found State One contravened the Corporations Act 2001 by failing to comply with two of the ASIC Market Integrity Rules (ASX Market) 2010.

Specifically, the Court found that State One:

  • On March 1 and March 2, 2011, placed 19 bids on behalf of a client, in circumstances where it should have reasonably suspected that the client had the intention of creating false or misleading appearance with respect to the market for, or price of, a stock.
  • failed, between February 10 and May 9, 2011, to maintain the necessary organisational and technical resources with respect to post-trade alert systems to ensure that it complied with the MIRs.

The company admitted to the contraventions in a Statement of Agreed Facts.

‘Market participants are reminded of the importance of their role as gatekeepers to our markets. If they fail to meet their obligations, ASIC will take action,’ ASIC Commissioner Cathie Armour said.

In addition, State One has agreed to pay $150,000 to ASIC to cover legal and investigative costs in this matter as part of the agreed resolution.

This is the second such action announced over the last few days in Australia. Earlier this week, ASIC said UBS Securities Australia Limited had paid a $120,000 penalty over alleged violation of the ASIC Market Integrity Rules (ASX Market) 2010. The company had been given an infringement notice by the Markets Disciplinary Panel ( MDP).

The MDP found that a number of transactions in relation to six on-market buy-backs conducted by UBS on the ASX market in 2017 were not in the ordinary course of trading and were not in accordance with the clients’ instructions.

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