Pershing Securities Australia Pty Ltd has been sentenced in Sydney’s Downing Centre Local Court to pay a total penalty of A$40,000 (US$28,400) after pleading guilty to mishandling client money. The judge indicated that she wanted to make an example of the firm.

Pershing pled guilty to breaking section 993C(1) Corporations Act 2001 and Regulation 7.8.01(1) of the Corporations Regulations 2001 - which are administered by the Australian Securities and Investments Commission - by transferring sale proceeds from international trading in client’s securities from trust accounts into its own general bank account over a period of approximately 424 days between March 2016 and December 2017.

Pershing also pled guilty to breaking section 993B(1) by failing to hold some client money that it had received in segregated client money trust accounts on a total of 707 days between January 2016 and December 2018.

The firm admitted to breaking section 993B(1) a second time by failing to transfer $1,044.65 into a trust account on 21 August 2017. The court did not sentence the firm for this misdeed, but did take it into account when passing sentence.

Magistrate Atkinson sentenced Pershing to pay a fine of A$15,000 for breaking section 993C(1) and A$25,000 for breaking section 993B(1). She noted that the firm was "unique in the marketplace” and ended by saying: "there is a strong need for general deterrence."

Pershing is the first company in Australia to be convicted of criminal offences for breaching client money provisions, which are designed to protect the interests of HNW clients by keeping their money separate from its own.

The Commonwealth Director of Public Prosecutions prosecuted the firm.