AFSL sentenced over reporting failures

The Australian Securities and Investments Commission (ASIC) has announced that Australian Financial Services (AFS) licensee Odyssey Equity Finance of Keilor East, Victoria, was sentenced on 24 April 2024 in the Dandenong Magistrates’ Court for failing to lodge financial reports with ASIC for each of the financial years ending 30 June 2020, 2021, and 2022.

Odyssey was charged with:

• Three counts of contravening s989B of the Corporations Act for failing to lodge a profit and loss statement and balance sheet.
• Three counts of contravening s989C of the Corporations Act for failing to lodge an auditor’s report with the profit and loss statement and balance sheet.

Odyssey had pleaded guilty on 7 March 2024. At the sentencing hearing on 24 April 2024, Odyssey, via its legal representatives, submitted that Odyssey’s failure to lodge financial reports with ASIC was not intentional but a result of the director’s ill health.

However, Her Honour Medina was not satisfied that the director’s medical treatment prevented compliance and noted that he had capacity to engage and instruct lawyers. However, his ill health and plea of guilty were mitigating factors.

ASIC said that Odyssey was discharged without conviction upon giving security by entering into a recognisance in the sum of $2,500 to be of good behaviour for a period of 12 months, pursuant to section 19B of the Crimes Act 1914 (Cth).

A special condition of the bond is that Odyssey is required to comply with outstanding reporting obligations within the period of the bond.

ASIC explained that AFSLs often manage large quantities of client funds and the failure to lodge annual accounts and audit reports hampers ASIC’s ability to determine the true financial position of a licensee and the value of funds held on behalf of clients.

The matter was prosecuted by the Commonwealth Director of Public Prosecutions following a brief and referral from ASIC.

The regulator said the maximum penalty for a body corporate for each failure to lodge a profit and loss statement and balance sheet (s989B(2) of the Corporations Act) is $1,332,000, with the maximum penalty for each failure to lodge an auditor’s report with the profit and loss statement and balance sheet (s989B(3) of the Corporations Act) also $1,332,000.