Davidof and Australian Securities and Investments Commission

The Administrative Appeals Tribunal reviewed a decision by the Australian Securities and Investments Commission (ASIC) to prohibit the applicant from providing financial services. The dispute centred on whether certain financial instruments, specifically MINI warrants, constituted "financial products" under the Corporations Act 2001 (Cth) and whether the applicant's trading activities in these warrants violated financial services laws. The applicant had been employed as a private client adviser and was accredited as a Level 2 Accredited Derivatives Adviser.

The primary legal issue before the Tribunal was whether the MINI warrants traded by the applicant were derivatives as defined by section 761D(1) of the Corporations Act, and consequently, financial products under section 761A. ASIC contended that these warrants met the definition of a derivative, making them financial products to which sections 1041A and 1041B of the Act applied. The Tribunal was required to determine if the applicant's transactions involving these MINI warrants constituted trading in financial products, and if not, whether ASIC had established a sufficient basis for a banning order.

The Tribunal reasoned that the MINI warrants in question did not satisfy the conditions stipulated in section 761D(1)(b) of the Act or regulation 7.1.04 of the Corporations Regulations 2001. Consequently, the Tribunal concluded that these warrants were not derivatives under the Act. As a result, the applicant was not engaged in transactions that fell within sections 1041A or 1041B of the Act because the transactions were not in financial products.

Given these findings, the Tribunal set aside ASIC's banning order. The Tribunal determined that ASIC had not established that the applicant had failed to comply with a financial services law, and therefore, no basis existed for making a banning order under section 920A(1)(e) of the Act.