Chong and Australian Securities and Investments Commission

This matter concerned an application by Mr Chong for a review of a decision by the Australian Securities and Investments Commission (ASIC) to impose a five-year banning order prohibiting him from providing financial services. Mr Chong contended that the banning order was unfair, prejudicial, harsh, and unreasonable, particularly as no clients had suffered financial loss, nor had he acted with intent to defraud or dishonestly. He argued that his procedural compliance issues had been rectified and that he had undergone significant training.

The Tribunal was required to determine three key issues: first, whether ASIC’s power to impose a banning order under s 920A(1) of the Corporations Act was enlivened; second, if so, whether a banning order should be imposed in Mr Chong’s case; and third, if an order was to be imposed, what the appropriate period of the ban should be.

The Tribunal affirmed ASIC's decision, finding that the power to impose a banning order was enlivened due to Mr Chong's contraventions of various provisions of the Corporations Act and Corporations Regulations, including s 1041H(1) (improperly using client signatures), s 945A (failure to have a reasonable basis for advice), and multiple sections relating to the provision of Statements of Advice. The Tribunal considered the nature and seriousness of Mr Chong's misconduct, referencing factors outlined in ASIC Regulatory Guide 98, such as dishonesty, recklessness, negligence, and systematic compliance failures. It found that Mr Chong's conduct was not merely careless but involved repeated failures and a lack of remorse or insight into the consequences of his actions. The Tribunal also emphasised the importance of maintaining professional standards, protecting the public, and reinforcing the integrity of the financial services industry, noting that banning orders serve a protective purpose rather than a punitive one.

The Tribunal concluded that a five-year banning period was appropriate in Mr Chong's case, citing the seriousness and duration of his misconduct, his lack of insight, and the need for deterrence and public protection. The Tribunal found that the imposition of a substantial banning order would assist market participants in understanding their obligations and would reinforce the integrity and reputation of the financial services industry.