The holder of a wholesale license, Lanterne Fund Services Pty Ltd, has been ordered by the Federal Court to pay a fine of 1.25 million Australian dollars for failing to comply with six general obligations of an Australian Financial Services License (AFSL) holder.

In a lawsuit brought by the Australian Securities and Investments Commission (ASIC), the court found that Lanterne had breached its AFSL obligations between March 2019 and October 2021 by:

- Not having adequate risk management systems
- Not having sufficient technical and human resources to provide the services covered by its AFSL
- Failing to ensure its representatives were adequately trained
- Failing to maintain the capacity to provide the financial services covered by its AFSL
- Not taking reasonable steps to ensure its representatives complied with Australian financial services laws
- Not taking all necessary measures to ensure the financial services covered by the license were provided effectively, honestly, and fairly

Lanterne operated under a business model of "license holder lessor." It authorized over 60 companies as authorized representatives (CARs), under which there were 205 authorized representatives (ARs). The businesses operated by CARs under Lanterne's AFSL included:

- Venture capital funds
- Managed investment schemes
- Agricultural advisory services
- Wholesale fund management services
- Corporate advisory services
- Wholesale real estate funds
- Energy trading funds
- Digital asset funds
- Climate change advisory services

In addition to typical upfront fees of $5,000 AUD per CAR, Lanterne also charged each CAR ongoing monthly fees of up to $3,000 AUD.

In announcing the fine, Justice McQuade stated that the breaches were serious and systematic.

"Lanterne's conduct fell far short of the reasonable performance standards expected of AFSL holders by the public. It failed to demonstrate the capacity to fulfill obligations and comply with applicable legal duties as an AFSL holder," Justice McQuade said.

"The substantive point that must be reflected in imposing the fine is that Lanterne effectively disregarded these obligations, resulting in financial services consumers ultimately facing risks that could have been mitigated by complying with the requirements set out in section 912A(1) of the Act. This calls for a significant penalty."