Christopher Malcolm Edwards told clients to invest in businesses he controlled
ASIC has banned NSW solicitor and accountant Christopher Malcolm Edwards from offering financial services for a 10-year period after he was found to have conducted financial services business without an Australian Financial Services licence.
The commission discovered that Edwards had provided financial product guidance for four years. He would advise his legal and accounting clients to invest funds in debentures issued by businesses he controlled – conduct ASIC described as “particularly serious”.
Edwards was a solicitor who was also registered as a tax agent, self-managed superannuation fund (SMSF) auditor and real estate agent. Nonetheless, he had no financial planning qualifications.
He ran Christopher M Edwards Solicitors and Accountants (Business) and would set up “deeds of agreement” between his clients and his companies. These deals required the clients to finance the company in question for three or four years; subsequently, they would get their principal and a fixed interest rate. In certain cases, the interest was settled quarterly.
ASIC determined that the deeds of agreement were debentures and fell under Corporate Act provisions as a financial product. The commission determined that Edwards possessed knowledge and use of the Accountants Exemption and was aware of the requirement for authorisation before he could offer financial product advice.
Per ASIC, Edwards offered financial product advice with “sufficient system, repetition and continuity such that he was carrying on a financial services business without holding an AFS licence or holding an authorisation from an AFS licensee”. The commission noted that he had asked clients to establish SMSFs, rollover funds into SMSFs and/or inject these funds into his companies.
The commission pointed out that there was a conflict of interest between Edwards’ professional obligations and his personal interest in financing his property development businesses. It therefore concluded that he was:
ASIC effected Edwards’ ban on Monday 15 September. The commission has also prohibited him from controlling (whether alone or with others) an entity that carries on a financial services business and from performing any functions involved in the carrying on of a financial services business for 10 years.
While he was previously authorized to offer limited financial services, the authorisation has been rescinded.
Edwards will be able to appeal the ruling before the Administrative Review Tribunal. ASIC confirmed that it is still investigating his conduct.
Since July 2016, accountants must either have an AFS licence or represent someone with an AFS licence in order to advice on the acquisition or disposal of an SMSF interest.
