One of Australia's largest retail brokers has been slapped with a record fine and a former head of trading banned after the corporate watchdog found it contravened numerous market integrity rules.
Openmarkets, which clears more than $50 billion in trades annually, agreed to pay $4.5 million to the Australian Securities and Investments Commission and appoint an independent expert to help reform the business.
During routine surveillance, ASIC identified a client of Openmarkets placing simultaneous bid and ask orders in the same security and at the same price on 2,011 occasions, which it found were likely to have the effect of creating an artificial trading price or a false or misleading appearance of active trading.
The same client was also responsible for suspicious trading in 2017 that resulted in a separate infringement notice from ASIC's markets disciplinary panel.
That Openmarkets has a history of compliance failures was "very poor" and an aggravating factor in its sanctioning, ASIC said in a statement on Thursday.
"This outcome sends a clear message to market participants that breaches of market integrity rules will result in substantial penalties that should not be seen as a cost of doing business," it said.
ASIC found Openmarkets had an insufficient compliance framework in place to deal with suspicious trading and failed to prevent unprofessional conduct by senior staff.
In one instance, a senior staff member warned a client in relation to SMARTS alerts that they triggered, instead of escalating the matter to compliance; a move the markets disciplinary panel considered "highly unprofessional and an aggravating factor".
The watchdog banned former Openmarkets head of trading Virginia Owczarek from providing any financial services for three years.
"Ms Owczarek is not fit and proper to provide financial services or to participate as an officer in the financial services industry," ASIC said.
It found she accepted a $2000 payment from a client for stock tips and engaged in inappropriate and unprofessional communications with a client regarding SMARTs alerts.
Openmarkets has accepted the infringement notice and uplifted its compliance controls and systems.
"Openmarkets today is a very different business than it was in the period when the above conduct occurred," it said in a statement.
"Since these matters were identified, Openmarkets has significantly overhauled its business, under the leadership of a new executive team."
