CommSec fined $20m, Kelsian acquires Horizons West and Westpac signs NRL sponsorship deal

Australia’s largest stockbroker CommSec, owned by Commonwealth Bank (ASX: CBA), has been handed a $20 million fine from the Federal Court after its was found it had breached market integrity rules, including over-charged customers in brokerage fees on almost 121,000 occasions.

The overcharge in brokerage fees alone were found to amount to $4.3 million.

Commonwealth Bank’s former subsidiary AUSIEX (previously known as CommSec Adviser Services) was also handed a $7.12 million fine.

The fines are believed to be the largest penalty ever handed down for breaches of market integrity rules.

Federal Court Justice Wendy Abraham ruled that both parties engaged in “systemic compliance failures”.

“CommSec failed to do all things necessary, during the period 1 March 2015 to 18 June 2020, to ensure that the financial services covered by its AFSL were provided efficiently, honestly and fairly,” Justice Abraham said.

Among other breaches, the court also found that both parties failed to comply with client money reconciliation requirements, provide accurate confirmations to customers for certain market transactions and include required identification in data submitted to market operators.

On top of the fines handed down, CommSec and AUSIEX were obliged to conduct an independent review of all systems and controls used in the provision of financial services and any compensation schemes.

CommSec executive general manager Richard Burns issued an apology to affected customers.

“These errors never should have happened,” he said.

“We have strengthened our systems and procedures to address these errors.”

Kelsian Group

Kelsian Group (ASX: KLS) has announced it agreed to acquire Horizons West Bus and Coachlines, in a deal that gives the purchase an estimated enterprise value of $23.4 million.

The acquisition includes a deferred consideration and earn-out component up to $7 million. Kelsian will also acquire Horizons West’s property, which includes tow depots for $16.7 million.

Adelaide-based Kelsian will take charge of one of Perth’s oldest family owned and operated bus and coach companies, which provides transport for schools, universities, government, corporates, and tours.

Horizons West owns and operates 138 buses from two strategic depot locations and is “well recognised in the Perth metropolitan area”, according to Kelsian.

Kelsian chief executive officer Clint Feuerherdt said the acquisition was an exciting opportunity to further expand into WA’s education transport market.

“This transaction is in line with Kelsian’s strategy adding to our growing contracted bus fleet and establishes an excellent platform for additional organic growth in the education transport sector,” he said.

The latest addition to Kelsian’s portfolio follows the acquisition of resources-focused transport business Go West Tours in July 2021.

The deal will be completed in late 2022 or early 2023.

Westpac

As popular figures continue to campaign for an end to sport organisation sponsorships involving fossil fuel companies, Westpac (ASX: WBC) has capitalised on potential openings, inking a multimillion-dollar, multi-year sponsorship deal with Australia’s National Rugby League (NRL).

Westpac joins Telstra as another major NRL sponsor, with the bank’s brand set to appear on the match balls from the start of next season.

The bank sees the deal as a chance to increase its mortgage sales in New South Wales and Queensland, with rugby league remaining the biggest winter sport, over AFL and soccer.

Westpac chief executive officer Peter King said it was the right opportunity for the major bank.

“It’s a sponsorship that suits our brand and lifts our profile, and that is why we have picked the NRL,” he said.

While the financial side of the mega-deal has not been disclosed, it’s been reported that its worth between $15-$20 million over three years.

As part of the deal, Westpac will support the men’s and women’s games equally, while also funding grassroots development programs.

Westpac’s latest news marks its biggest sponsorship deal since the Sydney Olympics back in 2000, and accompanies its existing deal with the Queensland Reds rugby union team.

Costa Group

Australian grower, packer and marketer of fresh fruit and vegetables Costa Group (ASX: CGC) has announced US private equity firm Paine Schwartz Partners plans to acquire a 13.78% stake in the company.

New York-based Paine Schwartz Partners has investments in a number of food and agribusiness across the globe.

The equity firm’s broker, Citi confirmed that any talks of a potential takeover was off limits, for now.

“At this stage, the shareholding is seen as a long-term investment and the acquirer has no current intention of making an offer to acquire control of Costa,” it said.

“The acquirer may potentially be interested in seeking a board seat in the event the FIRB (Foreign Investment Review Board) condition is satisfied.”

Macquarie Group (ASX: MQG) analysts have raised two risks involved in the deal with Costa —restricting its ability to make acquisitions in the future and losing influence over general boardroom decisions.

Despite that, investors welcomed the news with Costa’s share price up more than 7% in the week.

Medibank Private

Medibank Private (ASX: MPL) has announced a further development in its major security incident, confirming the cyber criminals accessed all Medibank, ahm and international student customers’ personal data, including health claims.

Names, addresses, phone numbers, and Medicare numbers, as well as highly sensitive health claims data was among information accessed.

The health insurance provider has issued a sincere apology to its customers, as it assists the Australian Federal Police with its ongoing investigation.

Medibank chief executive officer David Koczkar said while situation is distressing, the company will continue to work to provide the best outcome for customers.

“This is a malicious attack that has been committed by criminals with a view of causing maximum fear and damage, especially to the most vulnerable members of our community,” he said.

“We continue to work closely with the agencies of the Federal Government, including the ongoing criminal investigation into this matter. We thank them for their ongoing support and assistance.”

As a result, around $1.75 billion was wiped off the market value of Medibank after its shares resumed trading on Wednesday.