ASIC successful in criminal conviction against former BBY employee April Yuen

The corporate regulator has secured a second criminal conviction relating to the dishonest conduct of key employees at stockbroker BBY, nine years after it collapsed.

Former BBY CEO Arun Maharaj has also been charged by ASIC in relation to the stockbroker’s collapse. Picture: Hollie Adams/The Australian

The corporate regulator has secured a second criminal conviction relating to the dishonest conduct of key employees at stockbroker BBY, some nine years after it collapsed.

Former BBY strategy manager Yat Nam Yuen, known as April, was convicted after pleading guilty to two offences relating to breaches of 1041G (1) of the Corporations Act and section 11.2 of the Commonwealth Criminal Code. She received an aggregate sentence of two and a half years in prison, served via an intensive correction order, including 100 hours of community service.

The charges referred by the Australian Securities & Investments Commission related to Ms Yuen “aiding and abetting” BBY to engage in dishonest conduct, the regulator said in a statement on Tuesday.

The conviction follows the dramatic collapse of BBY in 2015 when the firm was unable to repay a loan to St George bank and had been caught up in questionable transactions involving trading positions and the shifting of client funds. Tennis great Ken Rosewall was on the board of BBY at the time, while his son Glenn was executive chairman.

The conviction of Ms Yuen follows the conviction and sentencing of BBY’s former head of operations Fiona Bilton last year, while former chief executive Arunesh Maharaj has been charged for matters unrelated to Ms Yuen’s sentence.

ASIC alleges Mr Maharaj “aided, abetted, counselled or procured offences” by another former BBY employee, who dishonestly received a financial advantage for BBY from St George Bank. The regulator claims that related to the improper drawing down of an overdraft account which BBY held with St George.

“ASIC is committed to investigating dishonest conduct in the licensed financial services industry and prosecuting such cases,” said Sarah Court, ASIC’s deputy chair, in the statement.

When BBY failed it threw 6000 customer accounts into disarray and there was a gaping shortfall in funds sitting in their accounts.

Client claims amounted to about $65m with a shortfall in their trading accounts of about $35m, after costs were taken into account. The issue in customer accounts arose, according to liquidator KPMG, as funds were mixed with the firm’s money to keep the broker afloat and meet costs and trading obligations.

The charges against Ms Yuen related to the 2014 transfer of $6.8m out of BBY’s futures client segregated account – a client money account used for futures clients – to fund a BBY’s margin payment to ASX Clear.

The following year, Ms Yuen caused the transfer of $1.6m of client money out of BBY’s Saxo buffer account, a client money account, and $350,000 out of BBY’s futures client segregated account, to fund a corporate payment owed by the stockbroking firm.

After unpicking KPMG’s findings, ASIC found the transfers were in breach of BBY’s obligation to hold client money on trust.

“The transfers were not repaid to the relevant client money accounts,” ASIC’s statement said, noting that Ms Yuen’s sentence took into account her plea and “other mitigating factors”.

“As a result of her convictions, Ms Yuen will automatically be disqualified from managing corporations for five years and will be unable to be involved in the business of a market participant in connection with securities and futures markets,” the regulator said.

The Commonwealth Director of Public Prosecutions led the case after a referral by ASIC.

ASIC’s win comes as the regulator faces criticism for not having a strong enough enforcement record. That has led to calls by Liberal senator Andrew Bragg for a separation of ASIC.