Societe Generale Securities Australia (SGSA) – a division of France-based bank Societe Generale – has pleaded guilty to four separate charges of breaching client money provisions, after it was revealed that it had deposited client money into unauthorised bank accounts between December 2014 and February 2017.
Specifically, the financial institution admitted to:
- two counts of breaching s993B(1) of the Corporations Act, by receiving money in connection with financial services, and then failing to pay that money into an account that satisfied the client money requirements; and
- two counts of breaching s993C(1) through making payments out of a client money account that were not permitted by reg 7.8.02 of the Corporations Regulations.
Each offence carries a maximum penalty of 250 penalty units (approximately $45,000).
A sentence is set to be handed down on 21 September 2020.
Last month, the Australian Securities and Investments Commission (ASIC) imposed additional conditions on the Australian Financial Services Licence (AFSL) of SGSA Australia in light of the charges.
In a bid to ensure compliance with the client money obligations under the Corporations Act 2001 and client money regulations, Societe Generale must now appoint an independent expert to assess its compliance practices, systems and processes.
The independent expert will be responsible for identifying any deficiencies and outlining any remedial action required in a report provided to both Societe Generale and ASIC.
The additional licensing conditions will also require Societe Generale to provide ASIC with attestations from a qualified senior executive and a board member, which confirm all remedial actions recommended by the independent expert have been adopted and implemented.
If the financial institution fails to provide attestations, it must:
- cease onboarding new customers if the onboarding involves receiving client money from or for the benefit of the customer; and
- refrain from charging brokerage fees in relation to any futures transactions executed, to the extent that the transactions involve receiving client money in Australia.
Societe Generale received a foreign ADI licence from the Australian Prudential Regulation Authority in May 2019.
The ADI licence enables it to conduct banking business in Australia, with the exception of receiving retail deposits – as per the conditions of a foreign ADI licence.
The French financial institution operates across a range of global networks, including the Asia Pacific, where it has been active since 1867.
Societe Generale opened its first Australian office in 1981, located in Sydney, where it has provided products and services in the areas of financial advisory and global markets.
[Related: ASIC clamps down on Societe Generale]