Kalkine faces internal, external scrutiny as ASIC looks again

The financial services firm will review its practices, in an internal review, while sources report regulators are re-examining 20 reports made over the last five years.

Kalkine chief executive Kunal Sawhney and with a Kalkine staff member in India.

The corporate regulator is re-examining some of the more than 20 reports made against financial services group Kalkine in the last five years as it attempts to work out if the firm is operating within its financial services licence.

The Australian Securities and Investments Commission declined to comment on Friday, but sources involved in the discussions said it was reconsidering earlier complaints after The Australian reported staff had pressured customers – some very elderly – to make trades in specific equities.

Kalkine is licensed to provide general financial advice, but cannot provide personal advice.

As the Australian reported on Monday, transcripts of calls spanning several years make clear that at least one representative, a man who identifies as Gabriel and says he is a “senior head”, discussed specific share trades with clients.

In one call, Gabriel urges a 90-year-old man to sell $100,000 of his $900,000 portfolio to invest in “better stocks”. “I’m going to give you a different subscription for health and the dividend only dividend because that suits you that has a better potential,” he says.

Other calls recorded by Kalkine show the company’s representatives instructing customers to sell blue chip investments.

In one call, Gabriel, tells a customer he has been holding “back to back meetings with CEOS of the companies from last two weeks”.

“These companies recently got their FDA approval and they are into the market is all about something to do with Covid situation,” he said.

“This has the potential to about 45 to 65 per cent of capital growth … First of all, (ClearVue Technologies) sell it out. I’m going to tell you why I’m saying this. It is going to be down. We can buy it again. But just get rid of it.”

Gabriel tells a customer in another call to buy shares in ASX-listed Brainchip, Navigator Global Investments, Monadelphous, and the Campbell Soup Company, makers of Campbell’s Soup.

Kalkine chief executive Kunal Sawhney.

Kalkine, which operates out of an office near the ASX in Sydney, is largely run out of Noida, a city in the Indian state of Uttar Pradesh, near the capital, New Delhi.

The Australian understands hundreds of staff work out of Kalkine’s Noida operation, while just a handful of staff work out of Kalkine’s George Street premises.

But, Kalkine’s Indian corporate records show Kalkine’s operations in the country are actually registered to a vacant shop front in the suburbs of New Delhi.

Kalkine chief executive Kunal Sawhney, who is currently in India, said the company was reviewing its operations.

“Kalkine believes in continuous improvement, we constantly review aspects of the business so as to seek and achieve better outcomes for all, especially our customers and our staff,” he said.

“Consistent with our licensing, we continuously monitor our operations so as to ensure our compliance with our various operational obligations.”

Former Kalkine clients have made repeated complaints about the company, which was banned from operating in New Zealand after the Financial Markets Authority found “concerning” behaviour by its staff. The FMA noted the company was “likely to mislead prospective clients generally in relation to Kalkine’s advice service” and was “likely to mislead clients in relation to Kalkine’s primary place of operations”.

The FMA began its investigation into Kalkine after a number of complaints from customers.

The Australian Financial Complaints Authority had 52 complaints about the business in the last four years. Kalkine was hit with 12 complaints in 2022.

Most of these complaints report being closed at AFCA at early stages, with former Kalkine clients telling The Weekend Australian that the firm often offered former subscribers a settlement and nondisclosure agreement that required them to not reveal the dollar sums offered and never subscribe to Kalkine again.

One former client said he was offered more than $190,000 settlement from Kalkine after losing $200,000 on trades recommended by Kalkine. “I got sick to death of losing money,” he said.

Kalkine, which describes itself as “a name to be reckon with in the stock market research space” has also been the target of action by the Australian Communications and Media Authority, which in 2021 fined the company $352,000 after it contacted some 5400 people on the Do Not Call Register.