Internal controls failed to catch Asiasons breach
Asiasons WFG Financial said that internal controls failed to catch a breach of its stockbroking arm’s operating licence, its non-executive deputy chairman Ng Teck Wah said yesterday.
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Firm focusing on measures to ensure no recurrence
By KENNETH LIM
28 December 2011
Asiasons WFG Financial said that internal controls failed to catch a breach of its stockbroking arm’s operating licence, its non-executive deputy chairman Ng Teck Wah said yesterday.
‘There were just some lapses in our own internal controls,’ Mr. Ng told BT. ‘Some of the technical breaches were not picked up.’
Asiasons said on Dec 23 that its wholly owned unit, Asiasons WFG Securities Pte Ltd, which is not a member firm on the Singapore Exchange, had stopped all business because it could not meet certain financial ratio requirements under its Capital Markets Services (CMS) licence.
The company said that it was conducting an internal inquiry, and warned that it might face sanctions from the Monetary Authority of Singapore.
MAS said that as a matter of policy, it does not comment on dealings with individual parties.
Mr. Ng said that whether Asiasons would seek to revive the licence is a secondary objective at this time.
‘We want to make sure our house is in order first,’ Mr. Ng said, adding: ‘Where these lapses are technical in nature, we want to know what are the remedial measures to ensure (there are) no such lapses in the future.’
The director said that the impact of the lapse was not expected to be significant, partly because Asiasons, formerly known as Westcomb Financial, had already been cutting back on its stockbroking business.
In its 2010 annual report, Asiasons said that it had stopped securities trading in 2009, and said that its broking business was focused on syndication of equity deals. The stockbroking business also has a small research team, but that is mostly ‘a support for the broking business’, Mr. Ng said.
Asiasons said in its filing on the Singapore Exchange that its other businesses, including private equity, exempt fund management, pre-IPO consultancy and corporate finance advisory, are not subject to any sanctions and are operating as normal.
Mr. Ng said that if Asiasons had to place out shares in deals from its corporate finance business, it could still do so using third-party brokers.
The private equity, fund management and pre-IPO consultancy businesses contributed about $500 million in after-tax profit last year, while the stockbroking unit registered a loss, Asiasons said.
‘Consequently, the lapsing of the CMS licence and cessation of the business operations . . . are not expected to have a material adverse impact on the financial results or position of the company and its group of companies,’ Asiasons said, without specifying the extent and nature of the lapse.
MAS guidelines on criteria for CMS licences state that boutique corporate finance advisory firms must have a base capital of at least $5 million, comply with financial and margin requirements, and maintain professional indemnity insurance.
For the six months ended June 2011, Asiasons reported a net loss of about $1.5 million and had $4.1 million in cash at the end of the period.
Asiasons’ shares last traded at 10 cents each.