Lee and Australian Securities and Investments Commission

Lee and Australian Securities and Investments Commission [2021] AATA 4048 (4 November 2021)
Division:TAXATION AND COMMERCIAL DIVISION
File Number(s): 2021/0575
Re:LEE
APPLICANT

AndAustralian Securities and Investments Commission
RESPONDENT

DECISION
Tribunal:Mr Rob Reitano, Member
Date:4 November 2021
Place:Sydney

I set aside the delegate’s decision and instead substitute a decision that Ms Lee be banned from providing financial services for a period of six years from 29 January 2021.
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Mr Rob Reitano, Member
CATCHWORDS
CORPORATIONS LAW – banning order – applicant prohibited from providing any financial services for a certain period – dishonesty - multiple forgeries of signatures and false witnessing - backdating documentation - whether applicant is a fit and proper person - whether applicant is likely to contravene a financial services law in the future - whether a banning order should be made - appropriate duration of banning order - set aside and substituted
LEGISLATION
Corporations Act (Cth) 2001 ss 913BB, 916A, 920A, 920B
SECONDARY MATERIALS
Regulatory Guide 98: ASIC’s powers to suspend, cancel and vary AFS licences and make banning orders
REASONS FOR DECISION
Mr Rob Reitano, Member
4 November 2021

This matter is about whether Ms Lee should be allowed to continue to provide financial advice and, if she should not be allowed to do so, for how long any prohibition should be. It comes about because on very many occasions between 2012 and 2017 Ms Lee forged some signatures, on one occasion that of a client and on many other occasions that of one or other of two of her colleagues on important documents that relate to her being in a position to give financial advice.
The delegate of the Australian Securities and Investments Commission (ASIC) decided that Ms Lee should be banned from providing financial advice for eight years. Ms Lee has asked the Tribunal to review that decision with a view to setting it aside.
I have decided to set aside the delegate’s decision and instead substitute a decision that Ms Lee be banned from providing financial services for a period of six years from 29 January 2021. I now explain why I have made that decision.
What happened?
From 5 June 2010 until 15 June 2017 Ms Lee was an authorised representee of the Australian and New Zealand Banking Group Limited (ANZ) who provided personal financial advice to people. For two later periods in 2017 and 2018 she also provided financial advice to people when she was employed by another business in the finance industry, but that later employment is not relevant to this matter.
Ms Lee has a Diploma of Financial Planning and a Masters of Financial Planning. She also undertook various courses within ANZ concerning ethical behaviour.
In late 2012 while working for ANZ Ms Lee completed what is known to the finance industry as a ‘fact find’ for a client. A ‘fact find’ is a document that sets out the detail of a client’s financial situation including things like the particular client’s goals, plans and aspirations. It acts as a declaration by the client about those things so that there can be no, or at least little, room to doubt the basis upon which a financial advisor is providing advice. The document is signed so that it shows that the client has read and acknowledged the contents of the document.
At about the same time Ms Lee also completed an investor profile and a statement of advice for the client. The statement of advice contains advice to the client and includes a financial adviser’s authority to execute the advice they have given to the client. Ms Lee falsified the signature on each document by signing them in the client’s name so as to pretend that the signature was in fact the client’s.
Again, between about August 2013 and some time in December 2014 Ms Lee engaged in conduct that involved her signing documents in other people’s names pretending that the signatures were the authentic signature of those other people. She did this eleven times over the period by falsifying on each occasion the signature of a work colleague as the second witness to a client’s signature on what is known as a Binding Death Nomination Form. The effect of this was that there was really only one witness to the client’s signature, Ms Lee, albeit that it looked like two different people had witnessed the client’s signature.
Although forging a signature is a serious matter in itself, the consequence in these circumstances made it more serious. The potential consequence of forging a signature on a Binding Death Nomination Form is the invalidity of the form so that a member’s wishes as to who the beneficiaries of their superannuation payments would be on death might not be honoured. The form, if valid, binds the trustee of the fund to honour the member’s wishes. The regulatory requirement is that the member’s signature be witnessed by two witnesses. A forged signature is not a signature of a witness at all. I will say some more about this in a moment, but I am not persuaded that the consequence is decidedly more serious having regard to the seriousness of forging a signature itself.
Returning briefly to the chronology, again between about February 2016 and January 2017 Ms Lee represented a colleague’s signature on six more Binding Death Nomination Forms when it was in fact her who had signed the document. This was of much the same consequence, or perhaps potential consequence, as her previous forged signatures.
There is one other incident which involved Ms Lee backdating by about four days some documents that were relevant to a statement of advice. In some ways that is less important but so far as the document suggested that she had witnessed the client’s signature it could not possibly have been so given that the client was interstate at the time. It was, nonetheless, another falsehood that Ms Lee was prepared to represent in a document.
What Ms Lee said about her conduct
Ms Lee accepted that what she did was wrong but outlined in some considerable detail in documentary and oral form a series of ‘explanations’ for why she did what she did even though she claimed she was not trying to find excuses for her conduct. I will set out in summary form the main explanations she offered here.
First, she explained that her conduct was in the context of a number of ‘problems’ that she said existed with ANZ’s systems which slowed down her capacity to complete her work efficiently. The effect of her explanation was that overriding the ANZ system was in the best interest of her clients.
Second, she claimed that ‘ANZ management knew that the witness false issues is a common practice in the field but never try to find out the reason or doing anything to reduce the risk that the planner needs to take’. By this I understood Ms Lee was suggesting that planners often falsified signatures and ANZ management knew about it. This was contrary to another employee’s evidence, Mr Tambyrajah, who rejected completely the suggestion that falsifying signatures was common practice. Ms Lee said that ANZ management turned a blind eye to the practice and that ANZ management put her in the position where she needed to do what she did in falsifying signatures. This was because there were no other staff present to act as a witness or because other staff were too busy to help her.
Third, and along similar lines, she claimed ‘the practice’ was widespread in ANZ and in fact across the industry. If ‘the practice’ was reference to forging witness signatures, then it was not supported by the only direct evidence of such practice, being the evidence of Mr Tambyrajah who denied any such suggestion. She named another large bank where ‘the practice’ was suggested as being rife but brought no evidence other than her own say so to support that claim.
Fourth, at various times she referred to the pressure she was placed under by ANZ, specifically by time restrictions imposed by ANZ. There was also reference to the fact that she considered she was being discriminated against.
Fifth, she explained that what she did was something for which she obtained no personal benefit and was consistent with her acting in the client’s best interests at all times. She said it would have inconvenienced the client to make them go away and get the form witnessed and return it.
Sixth, she said that none of the forms were invalid to the extent that nominations were not or would not be honoured, but one queries how she would have had any way of knowing that. In any event she maintained that she at all times acted in the client’s best interest.
What are the issues?
There are three issues that are relevant: first, does Ms Lee’s conduct result in a satisfaction about any of the things found in s.920A(1) of the Corporations Act 2001 (Act) which would give rise to the need to consider making a banning order; second, if it does is it appropriate to make a banning order banning Ms Lee from providing financial advice; and third, if it is should there be any time limit on any such ban.
What is the legal basis for determining the issues?
A person holding an Australian financial services licence is entitled to give someone else, known as an authorised representative, authority to provide financial services (s 916A(1) of the Act). That authority is void to the extent that it authorises a person in respect of whom a banning order is in place (s.916A(3) of the Act). ‘Financial services’ include giving what the Act calls financial product advice which in turn involves doing things to influence people to make decisions about financial products. There are two different kinds of financial product advice which are personal and general advice. Ms Lee was engaged in providing personal advice to clients.
There were two bases advanced by ASIC concerning why Ms Lee should be the subject of a banning order: first, that there was reason to believe that Ms Lee was not a fit and proper person to provide financial services and second that there was reason to believe Ms Lee is likely to contravene a financial services law.
Section 920A(1) so far as is relevant here provides:
ASIC may, in writing, make one or more orders (banning orders) against a person if:
…
(d) ASIC has reason to believe that the person is not a fit and proper person to:
(i) provide one or more financial services;
(ii) perform one or more functions as officer of an entity that carries on a financial services business; or
(iii) control an entity that carries on a financial services business
…
(f) ASIC has reason to believe that the person is likely to contravene a financial services law
Section 913BB(1) provides that ASIC must have regard to the matters set out in s.913BB(2) in applying s.920A(1)(d). Section 913BB(2) identifies the following matters as the matter that ASIC must have regard to:
(2) The matters are as follows:
(a) whether any of the following of the person has ever been suspended or cancelled:
(i) an Australian financial services licence;
(ii) an Australian credit licence, or a registration under the Transitional Act, within the meaning of the National Consumer Credit Protection Act 2009;
(b) whether any of the following has ever been made against the person:
(i) a banning order, or a disqualification order under Subdivision B of Division 8 of this Part;
(ii) a banning order, or a disqualification order, under Part 2‑4 of the National Consumer Credit Protection Act 2009;
(c) if the person is an individual—whether the person has ever been disqualified under this Act, or any other law of the Commonwealth or of a State or Territory, from managing corporations;
(d) whether the person has ever been banned from engaging in a credit activity (within the meaning of the National Consumer Credit Protection Act 2009) under a law of a State or Territory;
(e) whether the person has ever been linked to a refusal or failure to give effect to a determination made by AFCA;
(f) whether the person has ever:
(i) been a Chapter 5 body corporate or an insolvent under administration; or
(ii) if the person is a partnership—had a creditor’s petition or a debtor’s

petition presented against it under Division 2 or 3 of Part IV of the Bankruptcy Act 1966;
(g) if the person is the multiple trustees of a trust—whether a trustee of the trust has ever been a Chapter 5 body corporate or an insolvent under administration;
(h) whether, in the last 10 years, the person has been convicted of an offence;
(i) any relevant information given to ASIC by a State or Territory, or an authority of a State or Territory, in relation to the person;
(j) any other matter prescribed by the regulations;
(k) any other matter ASIC considers relevant.
Section 920B provides:
(1) A banning order made against a person may specify that the person is prohibited from doing one or more of the following:
(a) providing any financial services;
(b) providing specified financial services in specified circumstances or capacities;
(c) controlling, whether alone or in concert with one or more other entities, an entity that carries on a financial services business;
(d) performing any function involved in the carrying on of a financial services business (including as an officer, manager, employee, contractor or in some other capacity);
(e) performing specified functions involved in the carrying on of a financial services business.
(2) The banning order may specify that a particular prohibition specified in the order applies against the person:
(a) if the sole ground for the banning order is because paragraph 920A(1)(k) applies—for a specified period of up to 5 years; or
(b) otherwise—either permanently or for a specified period.
Note: This subsection applies separately to each prohibition specified in the order.
(3) A banning order may include a provision allowing the person against whom it was made, subject to any specified conditions:
(a) to do specified acts; or
(b) to do specified acts in specified circumstances;
that the order would otherwise prohibit them from doing.
What is a fit and proper person to provide financial services?
The meaning of the phrase fit and proper person is well understood these days; it generally refers to a person of good reputation who can be expected to carry out the things that are trusted to them honestly and competently in conformity with both legal and moral obligations. It refers to people who conduct themselves in an accepted way consistent with probity and proficiency by reason of skill, qualification or experience in a particular field of endeavour.
So far as financial services are concerned, like so many other fields of endeavour where fitness and propriety are concerned, the person must be someone who is trusted and who people will have confidence in to do the right thing if only because they are dealing with important things concerning other people such as their superannuation and retirement benefits.
Is Ms Lee a fit and proper person to provide financial services?
I have reason to believe that Ms Lee is not a fit and proper person to provide financial services. A person who pretends that the signature on an important document is someone else’s when it is their own signature is being dishonest. People of integrity do not falsify the signatures of others. The fact that the conduct happened many times over two reasonably lengthy periods in 2013 and 2014 and again in 2016 and 2017 suggests that the conduct was not some momentary lapse or involved succumbing to some temporary or aberrant circumstance but rather appears to be something more significant than that.
I have referred earlier to the potential serious consequences of the conduct, negating the wishes of superannuation fund members as to who their beneficiaries will be should they die, but in the view I take those consequences probably do not matter so much having regard to the objective fact of the dishonesty which is plain and simple. To the extent that the consequences link the fitness and propriety to the provision of financial services they are of some relevance, especially because Ms Lee does not, even now, appear to appreciate those consequences, potential as they may have been. This reflects adversely upon her competence to provide financial advice.
Further, Ms Lee’s lengthy attempts to justify her own wrongdoing by explaining it as involving fault on the part of others, particularly ANZ, or as involving something that others were doing as well, demonstrates both a failure to exhibit fitness and propriety as well as a failure to understand that the conduct was wrong. A fit and proper person would not do something that was objectively wrong because someone else required them to or because other people were doing the wrong thing. A fit and proper person would also accept full responsibility for their conduct. A fit and proper person would accept that forging signatures was plain and simple dishonest for which there is no excuse. Ms Lee does not appear to accept that given her lengthy attempts to explain her conduct by reference to others and what they were doing.
Next, there did not seem to be much remorse or contrition on Ms Lee’s part for what she did. Most of what she had to say invested much in other things, in particular deflecting responsibility for what she did to ANZ and by appealing to what everyone else was, according to her, doing. A fit and proper person would accept responsibility for their own conduct and, most likely, apologise for it. My impression from at least some of Ms Lee’s evidence suggested that she was only sorry because of the consequences for her, in particular the act that her employment opportunities were curtailed, that followed from her conduct.
So far as the claimed common practice is concerned, I am unable to make any finding at all about that. This is because it is almost only based on Ms Lee’s say so which is self-interested and self-serving and the evidence that was not hers suggested that there was no common practice in ANZ that involved forging signatures at all. In any event this matter is concerned not with what others were or might have been doing, but rather with what Ms Lee was doing. The things that she was doing, forging signatures on forms, were objectively dishonest and the fact that others may have been doing so does not make her conduct something different.
In the end the issue is resolved by simply asking whether or not a fit and proper person would engage in forging signatures to which the answer is, in my opinion, obviously no. That conduct happened some time ago, over periods of a year in each case, which gives me reason to believe that Ms Lee is not now a fit and proper person to give financial advice. The adjacent question is whether or not Ms Lee has demonstrated that, despite the conduct she engaged in some years ago, she is now a fit and proper person. In light of her evidence, especially her ‘explanations’, I have no reason to believe that she is a fit and proper person to give financial advice given her failure to accept responsibility for what she has done and her failure to express any significant remorse for what she did.
I should add for completeness I have considered all of the matters referred to in s.913BB(2)(a) to (j) in coming to my conclusion about Ms Lee’s fitness and propriety but none of them appear to have any relevance because there is no evidence that any of the things articulated apply to Ms Lee. The relevant matters to which I have had regard are those that I have referred to.
The alternative basis upon which ASIC proceeded was that there was reason to believe that Ms Lee was likely to contravene a financial services law in the future. I do not need to consider this in detail given the view I have expressed about Ms Lee’s fitness and propriety. I incline to the view that given that Ms Lee has engaged in such serious conduct as that which involves forging signatures, and her failure to accept responsibility for her wrong doing and to appreciate the seriousness of her conduct, irrespective of anyone else’s conduct, she is likely to contravene a financial services law in the future.
Should a banning order be made?

The concern here is with the protection of the public, in particular those who use or rely upon people who provide financial advice. The seriousness of the conduct, involving dishonesty, means that the public must be protected from its repetition and must also be protected by deterring Ms Lee as well as other financial advisors from engaging in similar conduct in the future. If it were the case, as was suggested by Ms Lee, that others were engaged in similar conduct, then the need to deter those people from engaging in such conduct is achieved by the making of a banning order.
In particular, I consider that Ms Lee’s failure to acknowledge the seriousness of her conduct and her failure to accept full responsibility for it means that there is a need for a banning order because I can have little confidence that the conduct will not be repeated in future and that ordinary members of the public will not be put at risk.
How long should the ban be for?
This aspect of the matter is very difficult especially having regard to the fact that I do not have any real confidence that Ms Lee has learnt much from what has followed from her conduct, as demonstrated by her attempts to deflect responsibility for what she did, her minimising her responsibility for it, and her engagement in a process which seems designed only to justify her actions.
Nonetheless Ms Lee appears to have gained little if anything from her dishonesty, so the dishonesty is perhaps not aggravated by personal gain. It is also relevant that Ms Lee admitted her wrongdoing at an early stage, but on at least one hypothesis she may have done so only as it was against a background that would have made it difficult for her to deny things.
Also relevant is the fact that because of what she did she has already suffered hardship by having effectively lost her employment with ANZ, even though in the end she resigned. She will suffer hardship as a result of prospective employers discovering that she engaged in dishonest conduct. A ban will operate to preclude any possibility at all of her from employment in her chosen field for the period of the ban and will to some extent add to any hardship because it will operate to utterly prevent her from acting as a financial adviser and securing a livelihood from what she is experienced in doing.
So far as any hardship is concerned her personal circumstances as a single mother and sole breadwinner with children who themselves have difficulties makes any period of a ban somewhat harsher than it might ordinarily be. That fact is important when regard is had to the specific deterrent effect that any period of ban will have. It is a significant factor that has influenced my conclusion that a period shorter than that proposed by ASIC should accompany the period of the ban.
ASIC’s Regulatory Guide 98 provides some guidance as to the appropriate period of any ban. I should have regard to the Regulatory Guide in order to ensure consistency of treatment in applying s.920B of the Act. It needs to be kept in mind that the Regulatory Guide itself cautions that the examples of conduct given are just that, examples, and should be treated as indicative only. That must be so because the period of any banning order will need to meet the exigencies of the particular case such as here where the hardship that might follow from any period of a ban will be more significant than it might be in the usual case.
The kind of conduct involved here was dishonesty, which based on Table 3 in the Regulatory Guide would indicate a minimum period of 10 years although the example given would arguably relate to misappropriation of funds. Interestingly, false, misleading and deceptive conduct which usually entails a degree of dishonesty as well is indicated as involving a potential ban of between three and 10 years.
It seems to me that the range of in excess of 10 years is reserved for more serious cases of dishonesty such as those that might involve personal gain and, perhaps, substantial loss to people. I should have regard to the fact that there was no personal gain obtained, or no proven financial loss although the client’s wishes about who their beneficiaries would be was put at risk. That would, I think, put the conduct in the middle of the range of seriousness indicating between three and ten years as an appropriate period rather than a period at the higher end of the range as was submitted by ASIC.
In the circumstances I consider that a ban for a period of six years from providing financial advice is an appropriate regulatory response that will give effect to the objectives of the Act in promoting fairness, honesty and professionalism by those who provide financial services. It will act as a significant deterrent to Ms Lee and others from engaging in dishonest conduct involving the forging of signatures in the event that she at some stage is engaged in some capacity involving her providing financial advice.
DECISION
I set aside the delegate’s decision and instead substitute a decision that Ms Lee be banned from providing financial services for a period of six years from 29 January 2021.

I certify that the preceding 45 (forty-five) paragraphs are a true copy of the reasons for the decision herein of Mr Rob Reitano, Member

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Associate
Dated: 4 November 2021

Date(s) of hearing: 15 October 2021

Applicant: In person

Counsel for the Respondent: Ms S Peterson

Solicitors for the Respondent: Mr W McPherson

[2021] AATA 4048

4 November 2021

Key Legal Topics

Areas of Law

Administrative Law

Commercial Law

Legal Concepts

Judicial Review

Procedural Fairness

Statutory Construction

Remedies

Penalty

Date(s) of hearing:	15 October 2021
Applicant:	In person
Counsel for the Respondent:	Ms S Peterson
Solicitors for the Respondent:	Mr W McPherson