ASIC cancels AFS licence of Jade Capital and bans one director
ASIC has cancelled the Australian Financial Services (AFS) licence of Sydney-based Jade Capital Partners, which provided managed discretionary account (MDA) services, and banned one of its directors from providing financial services.
Jade Capital’s licence cancellation took effect on 11 January 2019, while James Clinnick will be banned for a period of four years, ASIC said.
The commission has taken this action because an ASIC surveillance uncovered widespread non-compliance with financial services laws at Jade Capital. As a result, ASIC concluded that Jade Capital had failed to provide financial services efficiently, honestly and fairly, and Mr Clinnick was involved in Jade Capital’s breach of a financial services law by engaging in misleading and deceptive conduct.
“Jade Capital contravened financial services laws by advertising misleading returns, fees and costs, performance history and results relating to MDA strategies. Jade Capital also failed to maintain the competence to provide financial services and to ensure its representative was adequately trained and competent,” ASIC said.
Jade Capital advertised returns for its MDA strategies on its website and in a video presentation, which included ‘back tested’ returns. ASIC found the advertised MDA returns were likely to mislead potential investors into believing the returns were based on actual returns when this was not the case.
ASIC also found the advertised fees and costs could lead investors to believe Jade Capital would only receive income if an investor made profits when, in fact, Jade Capital received transaction fees from trading on behalf of clients under an MDA arrangement.
Furthermore, claims about performance in the video presentation were also likely to mislead investors into thinking the MDA strategies managed by Jade Capital had been generating consistently good results, ASIC said.
“AFS licensees must comply with financial services laws or risk losing their licence. Licensees must not mislead consumers when marketing their services. ASIC will not hesitate to take action when licensees or their representatives don’t comply with the law,” ASIC commissioner, Danielle Press, said.
“I also advise all consumers considering MDAs to evaluate the risks and benefits of an MDA. Consumers should ensure they have a good understanding of all the fees and charges, and carefully consider the scope of authority they are giving to their adviser,” she added.