Aussie broker hit with record $4.5 million fine

The fine is the largest ever imposed by the Markets Disciplinary Panel (MDP) but would have been even higher had Openmarkets not entered into an enforceable undertaking over the matter.

The Australian Securities and Investments Commission (ASIC) launched an investigation when it found evidence of suspicious trading by an Openmarkets client – the same client whose suspicious trading in 2017 led to Openmarkets being fined $200,000.

“The client had placed simultaneous bid and ask orders in the same security and at the same price on 2011 occasions (Same Price Orders),” ASIC said in a statement.

The MDP was scathing of Openmarkets, saying it had a “very poor” history and didn’t have the proper controls in place to identify suspicious trading.

“Openmarkets has a history of compliance failures (including a 2017 MDP infringement notice) which the MDP described as being ‘very poor’ and an aggravating factor affecting the outcome,” ASIC said.

“This outcome sends a clear message to market participants that breaches of market integrity rules will result in substantial penalties that should not be seen as a cost of doing business.”

The MDP was satisfied Openmarkets contravened “numerous” integrity rules, and found at least eight failings.

These included the “serious” and “very reckless” step of failing to engage the anti-wash trade filter – something that had also been identified in the 2017 infringement – and employing “insufficient staff with the appropriate skills, knowledge and experience to carry out effective trade surveillance”.

The MDP also found Openmarkets failed to report further suspicious trading to ASIC and that senior employees behaved improperly.

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“Openmarkets failed to prevent unprofessional conduct by senior staff,” ASIC said.

“This included a senior staff member warning a client in relation to (its post-trade surveillance system) SMARTS alerts that they triggered, instead of escalating the matter to compliance.

“The MDP considered this was ‘highly unprofessional and an aggravating factor’.”

Openmarkets’ former acting head of trading, Virginia Owczarek, has been banned from providing financial advice for three years.

The brokering firm said it had paid the fine and accepted ASIC’s infringement notice, but insisted its business is markedly different now to what it was at the time of the offences.

“Openmarkets today is a very different business than it was in the period when the above conduct occurred,” it said in a statement.

“Since these matters were identified, Openmarkets has significantly overhauled its business, under the leadership of a new executive team.”