A former Bell Potter Securities advisor has been sentenced to five years in jail for fraudulent conduct which cost investors and self-managed superannuation fund holders more than $1.6 million.
Glen Evans pleaded guilty to 10 different fraud-related charges in the Sydney District Court yesterday.
The prosecution followed investigations by the Australian Securities and Investments Commission into Evans’s conduct when he was the director of the now deregistered Kismet Trading, during his employment at Bell Potter Securities.
The ASIC investigation found Evans had failed to invest the money of his clients as agreed, provided false trading and performance reports, failed to repay the balance of the proceeds to the investors and in some instances used the clients’ money as collateral for his own trading account without their authorisation.
The fraudulent behaviour occurred between September 2002 and October 2008, when Evans resigned as an employee of Bell Potter Securities.
Evans had signed contracts with individuals and self-managed superannuation funds to invest in listed Australian equities and derivatives.
Chief executive of Warfield & Associates Brett Warfield told SmartCompany dodgy advisors usually prey on the more vulnerable investors.
“This is one type of fraud which really hits people because it’s so personal, it’s their money. When this happens it has a real emotion toll and it often comes when people are nearing retirement.”
Warfield says they’ll often lie and makeup false statements, like Evans did, to deceive their clients and this behaviour is usually taken into consideration by the judge when sentencing.
“The judges really frown on this when it’s done over a long period of time, but if it’s a one off and they’ve been under a stressful time the judge may be more lenient,” he says.
Warfield says there are a number of warning signs investors should take heed of if they’re suspicious of their financial advisors.
“The first alarm bell is if they’re not in contact with you and when you ring up to get information, they’re always being pushed away and not getting any customer service.
“The second thing is when you’re getting answers to questions which just don’t seem right. People need to be more involved in their finances and if they don’t get the right answers from their advisors, make sure they go up the line of authority and raise their concerns,” he says.
This case marks the second Bell Potter Securities advisor to be found guilty of fraud in the past month.
In late April, Lawson Donald was given a two year and six month suspended sentence after he was found guilty of rebooking share trades (the transferal of one client’s trades to another client’s accounts).
The size of his fraud exceeded $1.7 million and occurred across a three-year period between 2005 and 2008.
KPMG forensic partner Gary Gill told SmartCompany firms need to conduct diligent checks on all employees who will be managing money.
“Firms need to enhance their due diligence for people in high-risk roles. We tell our clients, when you’re employing anyone who’s dealing with money, do a proper background check on the person. Often with fraud, if you do some digging you’ll find they’ve probably done it before even if they haven’t been convicted.
“It’s one thing to do the due diligence upfront, but you must continue to monitor what your employees are doing and you often pick up warning signs which point to these behaviours,” he says.
SmartCompany contacted Bell Potter Securities but it provided no comment.
Gill says employers should make sure employees only have access to information which is necessary to do their jobs.
“Limit access to what they need to know and see only, and make sure you monitor what accounts employees are looking at and any transactions they’re making,” he says.