20 December 2023
2 min read
#Superannuation, Funds Management & Financial Services, #White Collar Crime & Regulatory Investigations
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As a regulator, the Australian Securities & Investments Commission (ASIC) oversees and regulates the financial system and enforces criminal and civil penalties for misconduct.
As part of that role, a recent ASIC investigation has led to the managing director of Eneco Refresh Ltd (Eneco), also the founder and executive chair of Eneco, to plead guilty to one count of market manipulation and one count of creating a false or misleading appearance of active trading. Eneco is a company that produces bottled water and is listed on the ASX.
ASIC’s allegations include that the managing director used the names of his family members 24 times to manipulate Eneco’s share price.
Each contravention of market manipulation carries a maximum penalty of 15 years imprisonment.
Mr Heng pleaded guilty on 1 December 2023 and the matter is listed in the Perth District Court on 2 February 2024 for sentence mention.
Section 1041A of the Corporations Act 2001 (Cth) details the offence of “market manipulation”. It provides that a person must not take part in (directly or indirectly) a transaction that has, or is likely to have, the effect of creating an artificial price for trading in financial products on a financial market operated in this jurisdiction or maintaining at a level that is artificial a price for trading in financial products on a financial market operated in this jurisdiction.
The criminal prosecution, conducted by the Commonwealth Director of Public Prosecutions on behalf of ASIC, follows the sentencing of another individual earlier this year, the online personality known as ‘Fibonarchery’ (Gabriel Govinda). Govinda became the first person to be convicted of an offence under section 1041D, which prohibits the circulation or dissemination of information relating to certain illegal transactions, including conduct that constitutes a breach of section 1041A. Govinda was sentenced to two and a half years imprisonment (to be released immediately on recognisance) and fined $42,840.
This prosecution formed part of ASIC’s crackdown on market manipulators, particularly in the social media sphere, known as “finfluencers” (social medical influencers who purport to provide financial advice, particularly investment advice). ASIC issued a statement last year advising that it “monitors select online financial discussion by influencers who feature or promote financial products for any misleading or deceptive representations or unlicensed financial services.” The statement said, “If you carry on a business of providing financial services, you must hold an AFS (Australian financial services) licence” unless certain exemptions or authorisations apply.
This is an evolving space and one to watch.
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Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
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