Commonwealth Bank and CommSec are facing civil penalty proceedings in the Federal Court bought by ASIC over alleged breaches of Market Integrity Rules, the Corporations Act and ASIC Act “relating to systemic compliance failures in the delivery of financial services.”

Australian Investment Exchange Limited (AUSIEX) is also a defendant.

ASIC alleges the conduct “spanned a significant period of time and involved failures across multiple systems and business areas. Commsec and AUSIEX submitted over 60 notifications to ASIC relating to the conduct.”

ASIC yesterday said its view was that “the number, breadth and duration of the conduct is significant and indicates the entities did not have adequate systems and processes in place to ensure compliance with their relevant obligations”.

CommSec and AUSIEX have co-operated with the investigation and entered into a Statement of Agreed Facts and Contraventions, a document that runs to 124 pages.

CommSec has been before the ASIC Markets Disciplinary Panel on seven previous occasions for contraventions of the ASIC Market Integrity Rules, receiving fines in excess of A$1 million.

In December 2013, ASIC entered into a Court Enforceable Undertaking with CommSec and AUSIEX, primarily in relation to possible contraventions of their client money handling requirements in the period between July 2010 and October 2013.

This involved the withdrawal of client money from trust accounts without the required written authorisations and failing to separate client money in accordance with the relevant provisions.

ASIC, CommSec and AUSIEX in the agreed statement said: “In light of these antecedents and the widespread nature and extended time frame of the admitted contraventions contained in this SOAFAC, ASIC has adopted the view that a civil proceeding is a more appropriate regulatory response in this case than reference to the MDP, so as to act as a greater deterrent.”