ASIC cancels firm’s AFSL and permanently bans adviser

On Monday, the Australian Securities and Investments Commission (ASIC) announced that it has permanently banned financial adviser Donald James Cuthbertson from providing any financial services, performing any function involved in the carrying on of a financial services business, and controlling an entity that carries on a financial services business.

Additionally, the regulator confirmed that it has cancelled the Australian Financial Services (AFS) licence of Mr Cuthbertson’s company, Professional Wealth Management Services (PWMS), with a condition that the external dispute resolution and arrangements for compensating clients remain in place for 12 months.

The regulator explained that Mr Cuthbertson is a director of three companies: PWMS, Professional Wealth Management (PWM), and Professional Wealth Investments. ASIC’s concerns arose from Mr Cuthbertson’s conduct regarding:

• offers of redeemable preference shares in PWMS;
• offers of unlisted shares in PWM;
• the promotion of a trading course involving contracts-for-difference; and
• unlicensed dealing in derivatives.

ASIC found that Mr Cuthbertson is “not a fit and proper person to provide financial services” and said he had misappropriated investor funds and made false or misleading representations in connection with the redeemable preference shares he offered in PWMS and unlisted shares in PWM.

Furthermore, the regulator said Mr Cuthbertson made false or misleading representations regarding the level of risk involved in trading contracts-for-difference and was involved in dealing with derivatives without appropriate authorisation.

PWMS’s AFS licence was cancelled based on the findings made regarding Mr Cuthbertson that PWMS:

• failed to do all things necessary to ensure that its financial services were provided efficiently, honestly, and fairly;
• failed to ensure it had adequate arrangements in place for the management of conflicts of interest; and
• failed to comply with the licence condition requiring PWMS to maintain total assets exceeding total liabilities as shown in the licensee’s most recent balance sheet lodged with ASIC.

ASIC noted that Mr Cuthbertson and PWMS have the right to appeal to the Administrative Appeals Tribunal for a review of its decision. Mr Cuthbertson’s banning is recorded on ASIC’s banned and disqualified register.