Clearing house pleads guilty to mishandling client money

Pershing Securities Australia pleaded guilty to the charges at the Downing Centre Local Court in Sydney on Tuesday. 

Further, Pershing has also accepted additional license conditions imposed by ASIC on its AFS license. 

The BNY Mellon subsidiary admitted to three breaches of the client money provisions, designed to protect the interests of AFS licensee clients by ensuring that client money is kept separate from licensee money.

The client money provisions also aim to limit the uses of client money, limit the circumstances in which client money may be withdrawn from client money accounts and imposing sanctions on licensees who fail to comply with client money provisions.

Specifically, the firm pled guilty to:

• Breaching s993B(1) between 25 January 2016 and 31 December 2018 by receiving money in connection with financial services, and then failing to pay that money into an account that satisfied the client money requirements within s981B of the Corporations Act 2001.
• Breaching s993C(1) between 30 June 2016 and 16 December 2017 through making payments out of a client money account that were not permitted by reg 7.8.02 of the Corporations Regulations.

Each of the offences carry a maximum penalty of 250 penalty units (approximately $45,000). 

Pershing also admitted guild to a third s993B(1) breach that took place on 21 August 2017, but as part of the plea, it will not be sentenced on it. The violation will instead be taken into account during sentencing for the other breaches. 

The matter has been listed for sentence on 27 July.