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ASIC was involved in investigating the conduct of OBC BANKING PTY LTD regarding allegations that it did not consider their personal circumstances...

ASIC was involved in investigating the conduct of OBC BANKING PTY LTD regarding allegations that it did not consider their personal circumstances when offering financial advice.

Here is a real-world example of conduct from the case Australian Securities and Investments Commission v Cassimatis (No 8) [2016] FCA 1023 (26 August 2016)

The Storm model generally involved investors being initiated into Storm by a preliminary appointment or "primer" meeting followed by an "education workshop". After the workshop there were meetings with an adviser. Storm would centrally produce a cash flow for the investor based on information provided by the investor to the adviser. Storm would also centrally produce a Statement of Advice (SOA). Much of the SOA was in standard, or template, form although particular amounts and ratios were tailored to the investor and some other sentences and paragraphs would be included for that particular investor. Almost 90% of Storm's clients were advised to adopt a strategy described by one witness (Mr. Cashel) as "double gearing". This advice involved (i) borrowing against the security of their homes; (ii) obtaining a margin loan; and (iii) using the funds from these loans to invest in index funds, establishing a cash reserve, and paying Storm's fees.

The investment by a Storm client did not usually conclude after this first occasion of investment. Consistently with the Storm model, Storm would send Statements of Additional Advice (SOAAs) to advisers for investors, or sometimes directly to investors, to make additional "step" investments if the market rose or fell by a certain amount, or if the client's circumstances changed significantly.

Mr Cashel has complained to ASIC about this.


Question:

  1. Did ASIC have the power to hold the investigation and the hearing?
  2. Does ASIC have any evidence as foundation to reasonably support them in investigating/what is the reason or specifically ASIC investigating?
  3. Can ASIC order the production of documents to assist their investigation/can they order people to give evidence?

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