Tag: ASIC

ASIC commences proceedings against Macquarie Investment Management

ASIC has announced it has commenced proceedings in the Supreme Court of New South Wales against Macquarie Investment Management Ltd (MIML) as the responsible entity of the van Eyk Blueprint International Shares Fund (VBI Fund). The proceedings involve investments of $30 million made by the VBI Fund in 2012 into a Cayman Islands based fund, known as Artefact Partners Global Opportunities Fund (Artefact). The VBI Fund was one of the Blueprint series of funds of which van Eyk Research Pty Limited (now in liquidation) was investment manager, and MIML was responsible entity.

MIML has admitted to five contraventions of the Corporations Act and the parties have filed an Agreed Statement of Facts.

ASIC and MIML have agreed that MIML failed to comply with its duties as a responsible entity by:

  • failing to adequately address risks associated with the decision for the VBI Fund to make 3 investments into Artefact between 6 July to 30 October 2012;
  • allowing members to redeem or withdraw units from the VBI Fund when it was illiquid in contravention of the Corporations Act and the scheme’s constitution between 15 June 2013 to 9 September 2013; and
  • failing to make adequate and timely enquiries in relation to van Eyk’s monitoring of the VBI Fund’s investment in Artefact between 18 February 2013 and 21 July 2014 (including not making adequate and timely enquiries as to why a full redemption from Artefact had not been paid between 1 January 2014 to 21 July 2014).

The Court will hear joint submissions from ASIC and MIML as to the appropriate penalty amounts. The final penalty amount is a matter that will be determined by the Court.

On 1 August 2014, MIML suspended redemptions from the VBI Fund and three other funds due to their exposure to the VBI Fund.  Between them these funds managed over $450 million.

On 15 August 2014, MIML terminated the VBI Fund, with unitholders owed around $30.9m relating to the Artefact investments. Since then, Artefact has repaid $20m to the VBI Fund. MIML recently paid the remaining approximately $10.9 million plus interest to unit holders (less fees and winding up costs) and expects to recover the majority of that amount from Artefact’s liquidator. ASIC acknowledges the efforts made by MIML to have the investors’ funds repaid.

ASIC has an ongoing investigation into van Eyk Research Pty Ltd, the entity MIML appointed as the investment manager of the VBI Fund. Van Eyk Research Pty Ltd went into liquidation in 2014.

Commissioner Greg Tanzer said, ‘The Corporations Act places important obligations on responsible entities which protect the interests of investors.  Those obligations require responsible entities to have a supervisory and monitoring role in relation to funds, even where external investment managers have been appointed. ASIC will take action against responsible entities when they fail to meet their obligations.’

The proceedings will be listed for directions on Monday 27 June 2016 and the parties will request an early hearing date from the Court.

Influencing Conduct and Culture – ASIC

A speech by Greg Medcraft, ASIC Chairman, discusses some important issues around corporate culture. Culture matters. Culture is at the heart of how an organisation and its staff think and behave. From the behaviour of the board, through senior management to the front line, he argues that organisations without a customer centric culture are likely to lose out to those who do.

Culture is a set of shared values or assumptions. It can be described as the underlying mindset of an organisation. It shapes and influences people’s attitudes and  behaviours towards, for example, customers and compliance.

It has been said that ‘culture is the new black’. It is on the minds of governments, regulators, boards, senior executives, and customers globally.

ASIC is concerned about culture because it is a key driver of conduct within the financial services industry. By focusing more on culture, we expect to get early warning signs where things might be going wrong to help us disrupt bad behaviour before it happens and catch misconduct early. We also think it will help us with identifying not just individual instances of misconduct, but broader, more pervasive problems.

Poor culture often leads to poor outcomes for investors and consumers, impacts on the integrity of the Australian financial markets, and can erode investor and financial consumer trust and confidence.

We are at an exciting time in history, when technological innovation is rewriting almost every industry including the financial services industry.

Very recently, Max Levchin, PayPal co-founder and former chief technology officer, said that his new fintech start-up, Affirm – which offers flexible and fast loans and is pitched as an alternative to a credit card – could challenge global financial institutions with a new model designed to better align with customer interests. Regardless of whether this particular vision succeeds, it is evident that new disruptors will continue to challenge incumbents.

In a new Telstra report, Millennials, mobiles and money, it was stated that, ‘millennials may be the first generation to live their lives never requiring nor engaging with a traditional institution and only ever associating the word “branch” with a tree’.

Social licence, social media and the 24-hour news cycle are also changing customer expectations and the way customers behave.

The Telstra report says that ‘the threat from fintech is significant’. It notes that two-thirds of millennials prefer to receive advice on financial products and services via a digital platform, and that automated robo-advice or digital advice is perceived to be more independent and preferred.

In this environment, building and maintaining a culture that your customer can believe in is imperative. There are more choices and information available to customers now than there has ever been before. Firms that do not have a good culture risk losing their customers to firms that do.

We recognise that culture is not something that can be regulated with black letter law. We know that it isn’t feasible to check over every company’s shoulder to test its culture, or dictate how a business should be run.It is an issue that companies themselves must address. Boards and senior management play an important role in setting the ‘tone from the top’ for an organisation. Culture requires senior leaders to think carefully about how their actions and behaviours support and advance the firm’s desired culture.

At the end of the day, you need to have a culture that your customers can believe in. If your culture genuinely reflects ‘doing the right thing’, this will be rewarded with longevity, customer loyalty and a sustainable business.

ASIC highlights significant failures in the retail OTC derivatives industry

ASIC has released a report detailing the findings of a recent surveillance program and identifying some serious and widespread compliance failures in the retail over-the-counter (OTC) derivatives industry. Over 70% of AFS licensees reviewed demonstrated issues with three or more of the seven compliance risks.

OTC-ASICIn recent years, ASIC has made a number of public statements about the concerning degree of non-compliance in the retail OTC derivatives sector. ASIC considers retail OTC derivatives to be complex, high-risk products which are often difficult to understand, even for experienced investors.

ASIC has observed a material increase in the number of Australian financial services (AFS) licence applications from entities seeking to operate retail OTC derivatives financial services businesses in Australia. In conjunction with this trend, we also identified increasing non-compliance by existing AFS licensees with a number of their Australian regulatory requirements.

We recently undertook a review to assess a large proportion of the AFS-licensed retail OTC derivatives industry against the following seven compliance risks:

  • failure to comply with the net tangible assets (NTA) requirement
  • failure to comply with notification requirements for change of control events and issues around new ownership compliance
  • failure to comply with client money provisions
  • poor, misleading or deceptive Product Disclosure Statements (PDS) and website disclosure
  • failure to comply with financial reporting obligations
  • failure to supervise authorised representatives and non-compliance by authorised representatives, and
  • claims that no financial services are being provided under the AFS licence.

This report summarises the key findings of that review and identifies areas where compliance standards can be raised in the retail OTC derivatives sector.

Our findings

Our review identified a high degree of non-compliance. Over 70% of AFS licensees reviewed demonstrated issues with three or more of the seven compliance risks. In particular, our compliance review identified that:

  • over 80% demonstrated issues with the disclosure in their PDS or website
  • over 60% had undergone a change of control (with some issuers exhibiting multiple changes of control in a 12-month period) and 85% of those entities had failed to notify ASIC as required
  • over 50% had not adequately complied with their financial reporting obligations
  • around 50% required additional detailed assessment to determine whether they adequately complied with their NTA requirements, and
  • nearly 30% did not appear to be providing any financial service under their AFS licence, despite some being licensed for a number of years.

Many of the compliance concerns we detected were contraventions of well-established regulatory requirements or non-compliance with fundamental AFS licensing obligations. We also observed a significantly high number of smaller, foreign-owned or foreign-controlled AFS licensees demonstrating either a lack of awareness or understanding of their Australian regulatory obligations, or reluctance to invest resources in meeting compliance obligations for their Australian businesses.

In total, we obtained more than 150 regulatory outcomes as a result of our review, including:

  • recapitalisation to comply with financial requirements
  • improvements to defective disclosure
  • submission of overdue financial reports
  • corrections to registry and AFS licence information
  • improved supervision of authorised representatives
  • rectification of compliance failings
  • cessation of unlicensed conduct, and
  • AFS licence suspensions and cancellations.

Commissioner Cathie Armour said, ‘This report highlights some serious compliance failures in this industry. We expect industry to take note of our findings and proactively remediate any areas requiring improvement to ensure they have adequate and enduring compliance measures to fulfil their regulatory obligations.

‘The report also provides a prudent warning to investors. We hope the report will encourage them to be more aware of the risks of these types of products as well as improve their understanding of the standards of practice they should expect from retail OTC derivative providers.

‘As can be seen from our surveillance findings and announcements, many of these investment products may not be appropriate for average investors, who are often caught out by the complexity and may not understand the heightened risk profile,’ she said.

 

ASIC enters fintech partnership with Singapore

According to InvestorDaily, ASIC has signed an Innovation Functions Co-operation Agreement with the Monetary Authority of Singapore (MAS) aimed at “helping innovative businesses in Singapore and Australia in their foray to the respective markets”.

The agreement will enable fintech businesses in Australia and Singapore to “establish initial discussions in each other’s market faster and receive advice on required licences, thus helping to reduce regulatory uncertainty and time to market”, a statement by ASIC said.

To qualify for the support offered under the agreement, businesses need to meet the eligibility criteria of their ‘home’ regulator, the statement said.

“Once referred by the regulator, and ahead of applying for a licence to operate in the new market, a dedicated team or contact person will help them to understand the regulatory framework in the market they wish to join, and how it applies to them,” ASIC said.

MAS chief fintech officer Sopnendu Mohanty said the agreement would help start-ups from both countries grow and expand into each other’s countries.

“Singapore has a vibrant fintech ecosystem, reinforced by sound infrastructure and a growing talent pool, to support companies intending to use Singapore as a gateway to other markets in Asia,” Mr Mohanty said.

“MAS is also looking forward to partner ASIC in joint innovation projects on the application of key technologies such as digital and mobile payments, blockchain and distributed ledgers, big data, and Application Programming Interfaces (APIs),” he said.

ASIC chairman Greg Medcraft said the Australian regulator is committed to encouraging innovation “that has the potential to benefit financial consumers and investors”.

“Since ASIC launched its Innovation Hub last year, we have seen a surge in requests by FinTech start-ups seeking assistance about how to navigate the regulatory requirements,” Mr Medcraft said.

“In particular we have dealt with robo or digital advice, crowdsourced equity funding, payments, marketplace lending and blockchain business models.

“It is very exciting to observe, and clearly some business ideas will want to scale up internationally. We believe this agreement with the MAS will help break down barriers to entry both here and in Singapore,” he said.

Brokers to be summoned by ASIC

From Australian Broker.

ASIC has revealed it will be serving notices to brokers to provide data, as a part of its fact find for the mortgage broker remuneration review. However, the FBAA is assuring that brokers should not be worried.

The FBAA’s Peter White, who met with the ASIC team heading up the review in Melbourne yesterday, said the corporate watchdog will be calling on brokers to provide data, following its data collection from lenders and aggregators.

“What will happen as of next week is notices will be served on the lenders for the data collection. The week after that the notice will be served on the aggregators. Brokers will be last on the list to get notices served on them,” White told Australian Broker.

“That will be about two to three weeks away before that happens.”

According to White, ASIC was vague on the specifics of what data they will be seeking, however he told Australian Broker it will be focussed on “drilling down on the borrower profile”.

White also said one “significant sized” lender – he could not reveal who – told him that there could be as many as three million transactions involved in the fact find.

Some aggregators have already submitted data to ASIC as a part of their cooperation with the review. AFG told brokers at its Masterclass in Sydney this week that it has already submitted a significant amount of data to the regulator, proving commissions are not a form on conflicted remuneration.

However, when brokers are summoned by ASIC in the coming weeks, White is assuring them they should not be worried.

“The big thing is that this is not anything to be scared about,” he told Australian Broker.

“The actual sampling of brokers is very small. I’m not allowed to divulge how many but it will be significantly less than 1,000 brokers. Most of the market won’t even know it’s happened.

“But those that do get served notices, ASIC are very keen to let them realise that selection doesn’t mean there is an issue with what they are doing or that they’ve been targeted for anything. It isn’t being done on alpha order either – it is just a random selection.”

ASIC will be calling the brokers selected prior to sending notices requesting the data.

ASIC takes first action against licensee for alleged breaches of FOFA ‘best interests duty’

ASIC has said it has commenced proceedings against Melbourne-based NSG Services Pty Ltd (formerly National Sterling Group Pty Ltd) (NSG) for breaches of the ‘best interests duty’ introduced under the ‘Future of Financial Advice’ (FOFA) reforms.

This is the first civil penalty action ASIC has taken against a licensee alleging breaches of the best interests duty and is seeking declarations of breaches and financial penalties.

Since 3 April 2008, NSG has been licensed to provide personal advice on risk insurance and superannuation products to retail clients. NSG employs advisers to provide financial services advice on its behalf as its representatives and authorised representatives (NSG advisers).

ASIC alleges that:

  • NSG failed to take reasonable steps to ensure that its advisers complied with the best interests obligation when providing advice to clients; and
  • as a result, on numerous occasions, NSG advisers did not act in the best interests of their clients.

In addition, ASIC alleges that:

  • NSG has not provided appropriate training to its advisers to ensure clients receive advice in their best interests. Instead, ASIC contends that NSG has trained its advisers that it is almost always in a client’s best interest to take out some form of life risk insurance, regardless of a client’s financial situation;
  • NSG’s written policies relating to legal and regulatory compliance and risk management have been inadequate, and in any event, not followed or enforced;
  • since 1 July 2013, on eight specific occasions, and because of advice provided by NSG advisers, clients were sold insurance and/or advised to rollover superannuation accounts that committed them to costly, unsuitable, and unnecessary financial arrangements; and
  • regular and or substantive performance reviews of advisers have not been conducted, and disciplinary action against advisers who do not act in compliance with their obligations under the Corporations Act has not been taken.

ASIC commences civil penalty proceedings against National Australia Bank for BBSW conduct

ASIC has today commenced legal proceedings in the Federal Court in Melbourne against National Australia Bank (NAB) for unconscionable conduct and market manipulation in relation to NAB’s involvement in setting the bank bill swap reference rate (BBSW) in the period 8 June 2010 to 24 December 2012.

The BBSW is the primary interest rate benchmark used in Australian financial markets, administered by the Australian Financial Markets Association (AFMA). On 27 September 2013, AFMA changed the method by which the BBSW is calculated. The conduct that the proceedings relate to occurred before the change in methodology.

It is alleged that NAB traded in a manner that was unconscionable and intended to create an artificial price for bank bills on 50 occasions during the period of 8 June 2010 and 24 December 2012.

ASIC alleges that on these days NAB had a large number of products which were priced or valued off BBSW and that it traded in the bank bill market with the intention of moving the BBSW higher or lower. ASIC alleges that NAB was seeking to maximise its profit or minimise its loss to the detriment of those holding opposite positions to NAB’s.

ASIC is seeking declarations that NAB contravened s12CA, s12CB, the former s12CC, s12DA, s12DB and s12DF of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act), s912A(1), s1041A and s1041H of the Corporations Act 2001 (Cth) (Corporations Act).

Further, ASIC has sought from the court pecuniary penalties against NAB and an order requiring NAB to implement a compliance program.

ASIC will be making no further comment at this time.

National Australia Bank Group Chief Risk Officer David Gall today issued the following statement:

“Trust in the integrity of our financial markets is crucial to a strong Australian economy. A fair, well-functioning and competitive financial system is crucial to providing the best outcome for customers and the wider community.

“NAB takes its role in upholding high standards of professional conduct seriously.  We are committed to service, integrity and ethics and our values reflect this.

“Following an industry-wide review by the Australian Securities and Investments Commission into participants in the Bank Bill Swap Rate (BBSW) market, ASIC has today filed a claim against NAB making a number of allegations including market manipulation and unconscionable conduct.

“These allegations relate to trading in the BBSW market during the period 8 June 2010 to 24 December 2012.

“NAB has fully co-operated with ASIC’s review and takes these allegations seriously. We do not agree with ASIC’s claims which means they will now be settled by a court process.

“As part of ASIC’s investigation NAB has provided emails, instant chat messages and telephone conversations involving our employees. NAB retains this information as part of our business processes.

“We remain committed to serving our customers and ensuring our people demonstrate the values and behaviours the community expects of us.

“As this matter is now before the court, it is not appropriate to comment further,” Mr Gall said.

Background

On 4 March 2016, ASIC commenced legal proceedings in the Federal Court against the Australia and New Zealand Banking Group Limited (ANZ) (refer: 16-060MR).

On 5 April 2016, , ASIC commenced legal proceedings in the Federal Court against the Westpac Banking Corporation (Westpac) (refer: 16-110MR)

Prior to filing against ANZ and Westpac, ASIC’s investigations into misconduct in the BBSW has seen ASIC accept enforceable undertakings from UBS-AG, BNP Paribas and the Royal Bank of Scotland (refer: 13-366MR, 14-014MR, 14-169MR). The institutions also made voluntary contributions totaling $3.6 million to fund independent financial literacy projects in Australia.

In July 2015, ASIC published Report 440, which addresses the potential manipulation of financial benchmarks and related conduct issues.

Mortgage brokers: ASIC goes fishing

From The Conversation.

The Australian Securities and Investments Commission (ASIC) inquiry into the way mortgage brokers are paid may uncover some isolated shady dealings but the system of remuneration for brokers is already regulated well enough by intense competition.

Assistant Treasurer Kelly O’Dwyer announced the inquiry last year in line with recommendations from the Financial System Inquiry and ASIC recently commenced the inquiry with a scoping paper. The focus is likely to be on whether the advice of brokers is in the best interests of the customers.

As always, there are questions about whether the remuneration incentives for brokers distort their advice. And, again as always, there are questions about whether the fact that big banks own some brokers leads these brokers to favour the products of their owners, and not necessarily to offer the products most appropriate to the customer.

In many ways, the inquiry is just part of the ongoing reviews of different parts of the finance sector. The same arguments are likely to be rehashed.

In announcing the review, ASIC Commissioner Peter Kell was clear that:

“We are focused on consumer protection issues in the context of personal credit products, ranging from small amount credit contracts through to home loans.”

There has been some discussion in the press that loans organised by brokers default at a higher rate than loans written by banks. The Australian Prudential Regulation Authority (APRA) might regard this as a concern for financial stability, but ASIC will be concerned with whether people are getting loans they really should not be. The focus will clearly be on consumer outcomes.

It’s worth looking at the mortgage broking sector mainly because it has been growing rapidly and is now quite big. About half of all mortgages are provided through brokers, up from 40% a decade ago. The upfront commissions for brokers are about 0.5%, which yields annual revenue of close to A$2 billion.

So it is a big and rapidly growing financial sector and ASIC has duly been charged to have a look around for problems. Australia already has laws addressing any concerns. The National Consumer Protection Act has, since 2011, put the onus on providers to act in the best interests of customers. ASIC is really just checking up that the law is being complied with.

While there may be some bad behaviour, it is hard to see what the concern is. People have a choice.

They can go to their own financial institution and buy a mortgage direct from the manufacturer. Alternatively, they can look around among financial institutions to find the mortgage that works for them.

Now they can also go to one of the dozens of mortgage brokers to see if one of them can find a better deal. From the customers’ point of view, there are hundreds of retail outlets (banks and mortgage brokers) offering mortgages.

The fact that mortgage brokers are taking market share away from the banks suggests that customers really appreciate the mortgage broker effectively cutting the buyer’s cost of searching.

There shouldn’t be a problem with the banks paying the broker for delivering the customer, as there is a clear cost saving to the bank. It does not need to have as many branches or as many staff.

Seen from the bank’s point of view, it can originate the mortgage through its own branch and incur some overhead and running costs, or initiate the loan through the broker channel and pay the broker for its overhead and running costs.

Ultimately, the client is buying a product, in this case a mortgage. The price the customer pays is transparent, as are the terms and conditions.

If brokers were not providing a good service, customers could easily swing back to searching for their own mortgage among the banks, or simply walk down the street to another broker. Smart customers will thus keep the providers honest and make sure competition works as it should.

There is a not a lot of academic research into the issues associated with remunerating mortgage brokers. What there is tends to be from the US, which has not had a good record in managing mortgages over recent years. The most relevant paper suggests that loan quality can be improved though requiring registration, higher education standards and continuing education and/or by requiring brokers to post bonds.

The ASIC inquiry will uncover more information about the sector. It may also find some people have behaved badly (as in any area of human endeavour), but it’s hard to see a significant structural problem in a very competitive market.

Author: Rodney Maddock, Vice Chancellor’s Fellow at Victoria University and Adjunct Professor of Economics, Monash University

Remuneration Review to Extend Beyond Brokers (But In Secret)

ASIC has evidently released the final scope of its review of remuneration in the mortgage broking industry – but only to industry insiders. According to media, the corporate regulator has confirmed it will review the remuneration arrangements of “all industry participants forming part of the value distribution chain”. This includes lending institutions, aggregation and broking entities, and associated mortgage businesses – such as comparison websites and market based lending websites – and referral and introducer businesses.

But why, we ask, was the scope not publicly disclosed? Why are ASIC seeking input only from industry participants? We agree the remuneration review is required – but the lack of transparency is a disgrace.

We asked ASIC about this and they replied:

At this point in time, ASIC has not published a media release commenting on the review or making the review available for download at this stage.

ASIC will usually put out a public statement, such as a media release or media advisory, on significant regulatory activities and outcomes, in order to:

  1. be transparent and accountable for what we do
  2. help inform our regulated population and the public of expected standards and of our priorities and areas of focus.

So they are happy with a private review evidently!

Worth also bearing in mind, the UK banned commission payments in the mortgage industry, which has moved to a fee for service model.

From Australian Broker.

ASIC has released the final scope of its review into the mortgage broking industry, in which it confirms the review will extend far beyond mortgage brokers.

The final scope, released to the industry yesterday, sets out the parameters of the review. These were informed by input received from industry and consumer representatives through industry roundtables and subsequent written feedback. In it, the corporate regulator has confirmed it will review the remuneration arrangements of “all industry participants forming part of the value distribution chain”.

This includes lending institutions, aggregation and broking entities, and associated mortgage businesses – such as comparison websites and market based lending websites – and referral and introducer businesses.

ASIC also confirmed the review will extend to non-monetary benefits that relate to the distribution of residential loan products.

However, the review will not extend to loan products outside of residential mortgages, such as reverse mortgages or construction loans, which do not comprise a predominate proportion of the home lending mortgage market.

NAB has already come out in support of ASIC’s final scope.

“We believe ASIC’s scope is appropriate and we look forward to continuing to work with the regulator throughout the review,” Anthony Waldron, NAB EGM broker partnerships, said.

“We’re dedicated to working with brokers to deliver a great customer experience and we believe this review will help continue to build trust and confidence in the mortgage broking industry.”

 

Older Investors Most Likely To Be Scammed

ASIC says “The Targeting Scams report published today shows losses reported to the Scamwatch website from investment scams doubled in 2015. ASIC is alerting the public to the ways they can protect themselves from scams that are designed to steal their money,” ASIC’s Deputy Chairman Peter Kell said.

“The ScamWatch data published by the ACCC indicates that a wide variety of scams, including investment and ‘get rich quick’ scams, continue to hit Australians. Overseas based scammers in particular commonly target consumers in wealthier countries such as Australia. People over 55, many of whom are looking for investment returns in a low interest rate environment, are often most at risk,” he said.

“ASIC received 367 reports about scams in 2015, although in our experience scams are often under reported.  The number of Australians contacted by scammers, and the amounts of money lost, are likely to be much larger than what is reported to us.”

In 2015 the top five types of scams reported to ASIC were:

  • overseas cold calling about investment opportunities;
  • overseas calls offering easy credit or loans after payment of an upfront fee;
  • sports arbitrage or gambling schemes;
  • money transfer schemes (job opportunity or other fraud); and
  • fake debt and invoice scams.

“The scams reported to ASIC generally come from overseas. In many cases the pitch to consumers is so professional, slick and believable that it is hard to tell these are not genuine financial opportunities. Scammers have sophisticated sales practices that include call scripts, false paperwork, fake websites and made-up referees,” Mr Kell said.

Typically, investment and financial scams will offer:

  • High, quick returns and sometimes tax-free benefits;
  • Big rewards for what seems a small upfront payment;
  • Discounts for early bird investors;
  • ‘No risk’ or ‘low risk’ investments, where ‘you can sell anytime’, get a refund for non-performance or have ‘guaranteed’ transactions;
  • Inside information or the opportunity to invest before a public float; or
  • ‘Magic’ software that claims to predict sporting results or promises to makes you rich through active share trading.

During Consumer Fraud Week 2016, the Australian Securities and Investment Commission is warning consumers and investors to ‘Wise Up to Scams’ and do some simple checks before they part with their money.