Reference no: EM133670195
Question: Mr Sam Maxwell Henderson, former chief executive officer, director and senior financial adviser of Henderson Maxwell Pty Ltd (Henderson Maxwell), has today been sentenced in the NSW Local Court.
Mr Henderson has been convicted of charges relating to issuing defective disclosure documents and dishonest conduct and will enter into a recognisance bond to be of good behaviour for a period of 2 years. Additionally, he was fined $7000 and $3000 respectively, a total fine of $10,000.
On 25 August 2020, Mr Henderson pleaded guilty to one 'rolled up' charge of dishonest conduct, an offence under section 1041G of the Corporations Act 2001 (Cth), and two counts of making a disclosure document available to a person knowing it to be defective, contrary to section 952D(2)(a)(ii) of the Corporations Act (20-196MR).
ASIC alleged, and the Court has declared, that between 1 July 2010 and November 2017, Mr Henderson engaged in dishonest conduct when he made false representations that he had a Master of Commerce, when he did not hold that qualification.
ASIC also alleged Mr Henderson breached the law in two instances in 2014 and 2016 by giving two clients a Financial Services Guide, containing the false representation that he held a Master of Commerce (Financial Planning).
Additionally, ASIC alleged that Mr Henderson made the false representation that he held a Master of Commerce in some of his professional biographies and descriptions, an interview conducted by a freelance writer for the purpose of drafting a marketing profile to promote Western Sydney University's Sydney Graduate School of Management Master of Commerce (Financial Planning) course, and his 2013 book, One-Page Financial Plan: Everything you need to successfully manage your money and invest for wealth creation (20-130MR).
In handing down her sentence, Magistrate Atkinson noted the need for the Court to send a message to the community at large that being a financial advisor is a specialist position. Marketing material and websites, including qualifications, need to be correct.
Her Honour applied a 25 per cent discount to the sentence due Mr Henderson's guilty plea.
The Commonwealth Director of Public Prosecutions prosecuted this matter after a referral of a prosecution brief from ASIC.
Background
Henderson Maxwell and Mr Henderson were the subjects of a bad advice case study in the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry - see Volume 2 (p 242) of the Final Report.
ASIC banned Mr Henderson from providing financial services for a period of three years in July 2019 (19-190MR). It was found Mr Henderson failed to act in the best interests of his clients, provide appropriate advice and to prioritise his clients' interests when providing personal financial advice.
Moneysmart.gov.au has useful information for consumers about choosing a financial adviser, including how to complain about a financial adviser and what to do if their adviser is banned.
You are required to respond to the following questions about the case study provided for Part A under preliminary tasks information.
1. A helpful first step in ethical analysis is to look for harms and benefits. What harm was done by the identified moral agent, and who were those done to?
2. Explain the financial advisor's values, principles and related normative theories of ethical that the moral agent violated.
3. Using examples, describe the culture of the financial services industry before the establishmentof the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, highlighting factors that made it easier for the ethical issues to develop.
4. What recommendations would you make to prevent unethical behaviours identified in this case from happening again?