Reference no: EM132607759

ASICBBY Limited (BBY) was founded in 1987 as an independent Australian financial services group and stock broking firm. By 2011, it had grown to be the second largest clearing participant in stocks and options in Australia. It employed about 200 staff and 30 000 clients, and operated in all states of Australia (except for the NT and ACT), the US and New Zealand. However, in May 2015 administrators had been appointed. Then, in June 2015 it was placed into liquidation. The ASIC launched an investigation into its operations to assess whether any criminal behaviour was involved in the firm's demise. The liquidators claimed that BBY had been trading when insolvent since 2011. It is estimated that BBY has outstanding debts of $40 million to creditors, including a $23 million shortfall in client accounts. The National Guarantee fund (NGF) has received over 300 claims from clients. The NGF has taken its grievances to court hoping to limit the amount it will be required to pay to BBY clients. Compensation from NGF is capped at about $11 million per firm. With claims of account manipulation, insider trading and the availability of compensation for investors through the NGF, the case is an interesting one for students of financial markets.

(a) Type a brief overview of the case.

(b) Describe the response of ASIC and NGF to it.

(c) Look for updates on recent events connected with the case (e.g. the outcomes of the pending trials, any action taken against other parties).

(d) Discuss the concerns that this scandal raises in relation to the stability of the Australian financial system