IOOF top executives will soon come under parliamentary scrutiny following allegations of front-running and insider trading at the financial services firm.
The Senate Economics Committee will call on IOOF officials – including managing director Chris Kelaher and head of advice research Peter Hilton – for questioning on July 7. The decision regarding the interrogation comes after Nationals senator John Williams delivered a speech about IOOF to the Senate on Wednesday night.
"Today there is a stain on IOOF. As if Australians have not been sickened enough by the dodgy financial practices of some at the CBA, Macquarie Private Wealth and the NAB, we now have very concerning allegations of insider trading, front-running and even cheating on exams," Senator Williams said.
"Instead of reporting these instances to the corporate regulator, ASIC, it was suggested [by IOOF authorities] that a donation be made to a charity," he said.
Senator Williams named Mr Hilton, who is also head of research at IOOF dealer group Bridges, as "a person who allegedly engaged in front-running when he conducted trades on at least 53 occasions over some 20 years".
Mr Hilton's role at Bridges is to make recommendations to affiliated financial planners to buy, sell or hold securities.
"In 2009 there was a potential breach assessment report in the research unit. It was investigated by Rob Urwin, head of investigations. Mr Hilton was questioned on his trading activities, including management of some Questor funds. Questor is a subsidiary of IOOF," Senator Williams said.
The senator quoted from notes from a meeting between Mr Urwin, Mr Hilton and IOOF group general counsel Gary Riordan that resulted in a warning letter being issued to Mr Hilton, dated 19 May 2009 and headed "First and final warning".
The letter, signed by then head of wealth management at IOOF Michael Carter, said in part:
"I have considered your response and it is deemed that your behaviour and actions warrant formal warning. In general if you are to continue in this role, your performance/behaviour needs to improve along with your ability to achieve set goals and demonstrate leadership qualities ... Please be aware that failure to improve and maintain adequate improvement in the above areas may result in immediate termination of employment."
"So this was considered a serious enough breach to warrant threatened dismissal by IOOF, but they did not report this to ASIC. Unbelievably, Peter Hilton was later promoted within the company," Senator Williams said.
"I also have in my possession documents, which are compliance breaches by him, where it is alleged he had junior staff cheat on training and compliance exams on his behalf.
"This results in a final warning, issued on 1 May 2014, where he is told that another breach would result in his dismissal. So that is two warnings to Mr Peter Hilton.
"Every issue I have raised tonight is backed up by a document or clear evidence in writing – and I make no apology for doing such," the senator said.
Mr Hilton is currently on leave.
Praemium has posted record inflows in its September 2021 quarterly update. ...
More advisers will look to acquire books of business as others leave the industry, a new survey has revealed. ...
Assets under management of the global top 500 asset managers climbed to US$119.5 trillion in 2020. ...