The Australian Securities and Investments Commission has permanently banned Andrew Peter Panayiotides from providing financial services.

ASIC found that Panayiotides failed to act in the best interests of clients when considering their financial circumstances and objectives and that he advised clients of Morgan Stanley Wealth Management inappropriately in relation to exchange-traded options or ETOs. Morgan Stanley employed him between January 2013 and May 2015.

The nature of the misconduct

Panayiotides' conduct exposed each of the client's superannuation accounts to short-cash-covered ETO positions that were contrary to the risk profile declarations that those clients had given him.

ASIC also found that Panayiotides knew, or ought reasonably to have known, that there was a conflict of interest between the financial benefit that he received (in the form of brokerage, from the numerous ETO transactions he advised clients to make) and his clients' best interests, and that he had failed to give priority to his clients' interests.   

ASIC also says that Panayiotides:

• improperly made payments into clients' bank accounts using his own funds;
• issued a false invoice;
• provided unethical advice to a client in relation to a superannuation fund withdrawal; and
• took out a personal loan with a client in return for offering 'reduced brokerage' while at another firm.

It also says that his conduct was "not of an isolated nature, was not inadvertent and occurred over a long period of time in which clients incurred significant losses." It therefore believes that he is likely to contravene a financial services law in the future and is not of good fame or character. He still has time to appeal to the Administrative Appeals Tribunal for a review of the regulator's decision.

Exchange-traded options

ETOs are a type of derivative that ASIC regards as highly risky. A call option is the option to buy the underlying shares whereas a put option is the option to sell the underlying shares. The sale of options to open a position is, according to ASIC, a highly risky strategy in which the potential for loss is unlimited in the case of a sold call.