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Under-fire brokerage challenges accuracy of ASIC statement

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A Steadfast network brokerage subject to court-imposed freezing orders has accused the corporate regulator of publishing a “misleading and inaccurate” statement.

As reported by insuranceNEWS.com.au yesterday, the Australian Securities and Investments Commission (ASIC) issued a press release outlining orders obtained in the Federal Court against Alliance Insurance Broking Services (AIBS) and its sole director Renato De Maria.

ASIC says that in support of its application for the orders it “alleged that Mr De Maria caused substantial client money held by AIBS to be improperly paid into a bank account for his own personal benefit”.

The orders prevent funds being removed from company bank accounts. An investigative accountant has also been appointed and the business must be sold.

In a statement published on its website, AIBS outlines its position and disputes ASIC’s version of events.

“A few months ago, ASIC commenced an investigation into AIBS relating to how AIBS was treating monies paid to it by clients,” it said.

“It is unclear to Alliance why that investigation was commenced as no client had, in fact, lost any money.”

AIBS says it is entitled to invest client monies in “certain permitted investments” and it invested in a company, acting on advice from accountants and advisers.

“Through a related entity of the company in which the monies were invested and acting on advice that he could do so, director Renato De Maria borrowed an amount equal to the amount invested for purposes unrelated to AIBS,” the statement says.

“ASIC has taken the view that the investment in the company was not a permissible investment and applied to the Federal Court seeking the appointment of a provisional liquidator.

“The Court determined not to appoint a provisional liquidator at this time; AIBS and Renato De Maria have agreed to sell the AIBS business, and have given various undertakings to the Court which are reflected in orders the Court recently made.”

AIBS says Pitcher Partners has been appointed to sell the business.

“ASIC has released a statement which AIBS considers to be misleading and inaccurate,” the statement continues.

“The fact is that it was AIBS who proposed an arrangement whereby the interests of all parties would be best protected by the sale of AIBS' business. ASIC rejected the proposal.

“The Court accepted AIBS’ position. Orders were then made to give effect to AIBS’ proposed arrangement.

“Most importantly, the orders referred to in ASIC’s statement have all been complied with by AIBS; and AIBS has cooperated fully with ASIC and is disappointed by the statement. It does not accurately reflect what has occurred.”

AIBS, which is Melbourne-based and focuses on business, specialty and motor insurance, says all clients continue to have full coverage for their existing policies.

It says it will operate on a “business as usual” basis throughout the sale process which is expected to conclude by the end of August.