Tier 1 dealing division of global bank facing criminal charges in Australia for withdrawing client money

Societe Generale faces four counts of severe breach, including withdrawing client money on approximately 4,636 occasions from the Australian client-segregated accounts and deposited the monies in client accounts held with Societe Generale S.A., Hong Kong branch.

Sydney Australia

Societe Generale Securities Australia Pty Ltd (SGSAPL) has been sentenced in Sydney’s Downing Centre Local Court on charges brought by ASIC relating to breaches of client money obligations.

Societe Generale Securities Australia facilitates client’s transactions in financial instruments and executes and clears transactions in futures and options on exchanges. Societe Generale Securities Australia is a subsidiary of Societe Generale S.A.

SGSAPL must pay a total penalty of $30,000 after pleading guilty to four separate counts of breaching client money obligations. This appears weak considering Australia’s very strict ruling on client asset segregation and how ASIC absolutely scrutinizes the OTC FX industry and censures participants far harder for less severe irregularities.

Yes, it may appear as though one rule exists for the banks and another for the OTC firms, however SGSAPL may well not get away scot free, as criminal charges are pending. Perhaps the banks can afford bigger lawyers than the FX brokers.

In delivering sentence, Magistrate Atkinson said, ‘In my view, despite all of the work that the company has done, there is still a need for general deterrence. Australia, in recent years, has had a banking Royal Commission and there has been action taken post that Royal Commission, and what is apparent is that a very strong message has to be sent about the need for companies to comply with legislation and regulation.’

SGSAPL was sentenced in relation to two counts of breaching s993B(1) of the Corporations Act by receiving client money in connection with financial services but failing to deposit that money into an Australian Authorised Deposit-taking Institution (ADI) or an approved foreign bank, as required under the law.

The first count took place between 8 December 2014 and 8 February 2017, when SGSAPL withdrew client money on approximately 4,636 occasions from the Australian client-segregated accounts and deposited the monies in client accounts held with Societe Generale S.A., Hong Kong branch. The accounts held by Societe Generale S.A. Hong Kong were not held with an Australian ADI nor an approved foreign bank.

The second count took place between 30 December 2014 and 8 February 2017 when SGSAPL deposited client money into five overseas non-ADI bank accounts on approximately 7,363 occasions.

During the period of both counts one and two, the average end-of-month total value of client-money not held in an account satisfying the requirements of the Act totalled approximately AUD $771 million.

Magistrate Atkinson sentenced SGSAPL to pay a total fine of $15,000 for counts one and two.

SGSAPL was sentenced for a further two counts of breaching s993C(1) of the Act, through making payments out of a client money account that were not permitted by regulations 7.8.02 of the Corporations Regulations (the Regulations).

Count three related to 20 occasions between 27 January 2017 and 9 January 2018, in which part of SGSAPL’s daily intercompany margin call/reconciliation process included withdrawing approximately $496,777,226 in client money from client segregated accounts.

Count four took place Between 1 January 2015 and 22 September 2016, when a total of approximately AUD $144,000 in bank fees and charges was improperly withdrawn from the client-segregated accounts.

The relevant withdrawals made in count three and four were not permitted withdrawals under the Regulations. Magistrate Atkinson sentenced SGSAPL to pay a total fine of $15,000 for counts three and four.

ASIC Commissioner Cathie Armour welcomed the decision.

‘The protection of client funds is critical to investor confidence and market integrity. The law is very clear about the uses of client money to provide certainty and transparency for clients and licensees. Breaches of these requirements are a serious compliance failure,’ Ms Armour said.

‘This is the second criminal prosecution brought by ASIC in recent months where a licensee failed to deal with client funds in a manner required by law. ASIC will continue to devote resources to ensure that client monies are dealt with appropriately’.

The Commonwealth Director of Public Prosecutions prosecuted the matter.

Back in June this year, the censuring also required SGSAPL to provide ASIC with attestations from a qualified SGSAPL senior executive and a SGSAPL board member that confirm all remedial actions recommended by the independent expert have been adopted and implemented.

If attestations are not provided, SGSAPL must:

  • cease on-boarding new customers if the on-boarding involves SGSAPL receiving client money from or for the benefit of the customer; and
  • refrain from charging brokerage fees in relation to any futures transactions executed by SGSAPL to the extent that the transactions involve SGSAPL receiving client money in Australia.

These restrictions remain for the period the attestation remains outstanding.


In addition to keeping separate client money from money belonging to licensees, the client money provisions also protect the interests of clients of AFS licensees by:

  • limiting the uses of client money;
  • limiting the circumstances in which client money may be withdrawn from client money accounts; and
  • imposing sanctions on licensees who fail to comply with the client money provisions.

Read this next

Metaverse Gaming NFT

Despite crypto winter, Fastex grabs $23.2 million in Fasttoken token sale

Fasttoken, part of the Fastex web3 ecosystem, has secured $23.2 million in financing through the private and public token sales of its native cryptocurrency Fasttoken (FTN).

Digital Assets

Iran to repay Russian debts in gold-backed stablecoins

A high-ranking member of the Russian parliament confirmed reports that his country was in talks with Iran to create a stablecoin for foreign trade settlements, to replace the dollar, ruble and Iranian rial.

Digital Assets

SEC denies Cathie Wood’s bitcoin ETF for second time

The approval of a regulated crypto derivative is still looking far less likely, as the US regulators have once again denied Cathie Wood’s application for a long-awaited spot bitcoin exchange-traded fund (ETF).

Executive Moves

Pavel Spirin promoted to Scope Markets CEO following Rostro acquisition

Belize-based FX and CFDs brokerage Scope Markets has promoted Pavel Spirin to take on an expanded role as the company’s chief executive officer. He replaces the outgoing CEO Jacob Plattner, who has also been a major shareholder since he resigned his position as managing director at GKFX.

Retail FX

Public.com goes all-in on alternative investing, launches Rare Sneaker Portfolio

“The concept of curated Portfolios means that our members will be able to invest in categories like art, trading cards, royalties, and real estate without needing to become subject matter experts on individual assets.”

Industry News

State Street taps AWS and Microsoft for cloud and infrastructure solutions

“By standardizing and simplifying our technology operating model, we will be able to more quickly deploy client environments and launch new products and services, while continuing to enhance the resiliency of our technology environment and our business operations.”

Institutional FX

Bitpanda launches Investment-as-a-Service business for banks, fintechs, online platforms

“Financial institutions today have to ask themselves how they aim to cater the increasing demand for modern investing solutions. Building these Individually, means a high startup cost, and products that are often outdated before they are even launched.”

Institutional FX

Options expands market data feeds after partnership with Tools for Brokers

“Our integration with ACTIV Financial marked the beginning of a new era in market data availability and infrastructure. Our teams have come together to provide unparalleled, fully managed market data services alongside Options’ global connectivity and infrastructure.”

Industry News

Recruitment in financial services sector buoyant despite planned mass layoffs

“It remains to be seen what impact this will have on hiring levels within the financial services arena this quarter”, said APSCo, regarding the expected mass layoffs within the financial services sector in England & Wales.