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16-042MR ASIC accepts enforceable undertaking from Sino Investment Services and director, Richard Li
ASIC has accepted an enforceable undertaking (EU) from Australian financial services licensee Sino Investment Services Pty Ltd (SIS) and its sole director Mr Richard Li, following an ASIC investigation into concerns about compliance with financial services laws.
Sino Investment Services is a Melbourne based company that has held an AFS licence since 2004. Mr Li is the responsible manager of the financial services business of SIS and an authorised representative of SIS' AFS licence.
ASIC's investigation found that:
- SIS had not lodged financial statements for the financial years ended 30 June 2013, 30 June 2014 and 30 June 2015
- as at 31 December 2014, there was a $355,144 deficiency of cash held in the trust accounts of SIS on behalf of the clients of SIS
- the clients of SIS had not consented to certain withdrawals being made from the trust accounts, and
- Mr Li had authorised the withdrawals as the sole director of SIS.
ASIC has accepted an EU which requires SIS and Mr Li to repay to clients the entire amount that should have been held in each client's trust account. SIS and Mr Li acknowledge that, due to the absence of a formal trust deed being in place with each of the clients, SIS and Mr Li misunderstood that the client funds were to be held in trust for the benefit of clients. They were not aware of the legal effect of section 981H of the Act or Corporations Regulation 7.8.02(1); SIS and Mr Li have since deposited sufficient funds in the trust accounts to repay all of the clients.
Further, under the EU, SIS is required to:
- lodge an application with ASIC to cancel the AFSL
- revoke the authorisation of Mr Li
- lodge the outstanding financial statements with ASIC, together with relevant late fees, and
- send a copy of the EU to all clients.
Mr Li is required to:
- provide all necessary assistance to SIS to ensure compliance with its undertakings
- provide ASIC with a statutory declaration in respect to repayment of the client money by SIS and him.
Finally, both SIS and Mr Li have agreed to not reapply for an AFS licence nor provide financial services in any capacity for a period of 10 years from the date of the EU.
Deputy Chairman Peter Kell said 'ASIC will take action against financial services licensees and their responsible managers to ensure that they continue to comply with their obligations under the Corporations Act.'