On 10 November 2022, ASIC accepted a court-enforceable undertaking from financial advisory firm Lasarith Pty Ltd, trading as ‘Succession Matters’, and its sole director and responsible manager, Adam Smith.
Under the terms of the undertaking, Lasarith will cease operating its financial services business under its Australian Financial Services Licence (AFSL) and commence the process to cancel its AFSL by 8 February 2023.
Mr. Smith has also undertaken to conduct further professional training and not to be a responsible manager of any other AFSL holder for a period of at least 18 months from 10 November 2022.
ASIC commenced an investigation into Lasarith and Mr. Smith after becoming concerned that Lasarith and its authorized representatives had failed to provide statements of advice to clients as required by the Corporations Act. ASIC’s investigation subsequently identified:
at least 24 occasions during the 2016/17 and 2017/18 financial years when Lasarith and its authorized representatives failed to provide a statement of advice to clients in accordance with s946A of the Corporations Act; and
at least 30 occasions during the 2016/17 and 2017/18 financial years when Lasarith and its authorized representatives failed to provide a statement of advice to clients within the period specified in s946C of the Corporations Act.
Despite Mr Smith knowing about the failure to provide statements of advice since at least 7 March 2017, ASIC’s investigation found he:
failed to take sufficient action to prevent breaches of the Corporations Act from occurring, until September 2017; and
failed to cause Lasarith to notify ASIC of the breaches until September 2021; and
did not fulfill all of his obligations as the responsible manager of Lasarith during the 2016/17 and 2017/18 financial years.
Court Enforceable Undertaking
ASIC may accept a court-enforceable undertaking to improve and enforce compliance with the law. Court-enforceable undertakings are not always used as an alternative to other enforcement actions, they can also be used to complement or enhance such actions.
ASIC will not usually accept a court-enforceable undertaking:
instead of pursuing criminal court proceedings;
where the misconduct is deliberate or involves a high level of recklessness, or
after a matter has been referred to an ASIC delegate or another specialist body.
ASIC generally requires that a court-enforceable undertaking contains admissions that the party providing the undertaking contravened legislative provisions. If the party does not comply with the undertakings, ASIC will seek to enforce the undertaking through the court.
Further guidance on how ASIC uses court-enforceable undertakings can be found in Regulatory Guide 100 Court-enforceable undertakings (RG 100).