Sydney-based authorised representative Eli Ekman, of Dover Heights, NSW, has been prohibited from providing any financial services in any capacity for five years, under the terms of a court-enforceable undertaking (EU).
Details of the EU can be found on the Enforceable Undertakings register.
The prohibition follows an ASIC investigation into Mr Ekman’s conduct between 2015 and 2016 when applying for shares in two companies that subsequently listed or relisted on the ASX. This is a result of ASIC’s continued investigation into the provision of shareholder spread through artificial means.
Mr Ekman admitted that he had provided false information, including arranging false addresses for non-genuine buyers of the shares. This false information was provided to the ASX so that the companies could meet the ASX minimum-spread requirement initial shareholders for admission or readmission to the ASX official list.
ASIC’s view, which Mr Ekman acknowledged, is that Mr Ekman may:
- have contravened a financial services law;
- have had a defective and/or inadequate understanding of the ASX Listing Rules as they related to the minimum-spread requirement; and
- have engaged in conduct relating to a financial product that was misleading or deceptive, or was likely to mislead or deceive, contrary to section 1041H of the Corporations Act.
If there is a breach of the undertaking, then the ASIC Act enables the regulator to apply for a court order to enforce compliance.
ASIC Commissioner, Cathie Armour said, ‘The fairness and efficiency of a securities market depends on investor trust in its rules. Investors make decisions to invest in securities on the basis of rules requiring a reasonable number of initial investors to promote an efficient and liquid market in the new entity’s securities.’
Under the EU, Mr Ekman has also made a community benefit payment of $10,000 to Ecstra Foundation Limited, a not-for-profit company established to advance the education of financial consumers and assist the more vulnerable.
Background
The ASX Listing Rules set out the minimum requirements that must be satisfied for a company to list its securities on the ASX. One of these conditions includes that a company must have at least 300 shareholders (the minimum spread requirements), and up to 400 if there are a significant number of related parties.
The purpose of the minimum spread requirement is to demonstrate that there is sufficient investor interest in the company to justify its listing. This operates to ensure some level of liquidity at the time the company is initially listed and keeps poorer quality applicants that are not able to attract sufficient investor interest to meet the minimum spread requirement from being admitted to the ASX official list.
ASIC reminds market participants of their obligations when acting on behalf of companies seeking admission to the official list of ASX Limited, pursuant to both the ASX Listing Rules and the Corporations Act 2001.