A "forensic" investigation into allegations of front running and faulty research reports by a senior IOOF executive has found numerous breaches of IOOF's trading policy.
The IOOF-funded report by PwC also identified the potential for the executive to front run during his role as an asset manager for the multi-billion dollar subsidiary Questor.
Far from giving IOOF and the executive a clean bill of health as the company has publicly claimed at a recent senate hearing, PwC recommends IOOF broaden the investigation to allow it to examine trading by the executive in the Questor fund he was managing.
At the time the executive was running the $200 million Questor fund, he was also writing research reports, and trading his wife's account.
Labor Senator Sam Dastyari said the Senate Economics Committee felt the need to release the report to clarify the public record.
"I'll leave it to others to determine whether or not what [IOOF chief executive] Chris Kelaher said was intentionally misleading but it certainly wasn't a representation of the facts," Senator Dastyari said, referring to Mr Kelaher's recent testimony to the Senate regarding the allegations.
Senator Dastyari also said he was concerned about the company's "victimisation" of whistleblowers who he said had acted with integrity.
The PwC report, which has been redacted to remove the name of the executive under investigation, concludes there is no evidence of front running or insider trading.
However, it reveals the investigation was narrow in scope and all information was supplied by IOOF. It also says many of the allegations made by the whistleblower were not investigated because they weren't included in the terms of reference.
The allegations into front running date back to 1998 yet PwC's remit was only allowed to investigate potential front running from 2009.
This was despite the executive under investigation being internally examined by IOOF in 2009 for alleged front running in 2008 and 2009. He was given a first and final warning by the company following that investigation.
The report discloses that as part of its investigation, IOOF would not allow PwC to interview the executive or the whistleblower or directly request information from staff in the research department. It was not given access to information from client order books, or the executive's computer, his hard drive or work emails or other trading facilities through another broker.
The investigation did not include allegations of misrepresentation performance figures, getting juniors to cheat on training modules and compliance exams
"Our services have been primarily based upon the information provided by IOOF," it says. "We have relied on and not verified the truth or accuracy of all information or material provided or made available to us during our engagement." Given the limited scope, it assumes no responsibility for the "accuracy" or "completeness" of the information in the report.
A spokesman for IOOF said during the review PwC identified a "potential" for the IOOF employee to have front run during his role as an asset manager for Questor from late 2008 to early 2009.
"While this situation was not included in the scope of the initial review, PwC has now been retained by IOOF to follow up a number of matters arising out of its first report and the complainant's allegations," the spokesman said.
The release of the report comes as IOOF chairman Roger Sexton and two other executives are due to appear at a Senate hearing into the company's response to the alleged misconduct on Monday. The PwC partner responsible for the report Malcolm Shackell will give evidence via teleconference.
Fairfax Media last month revealed IOOF had investigated the executive at least three times between 2008 and December 2014 over allegations including front running, plagiarism, asking direct reports to cheat on his compliance exams for him and the misrepresentation of performance figures.
The IOOF whistleblower has looked at the PwC report and describes it as "manifestly flawed" and deeply disappointing.
Nationals Senator John Williams, who lambasted IOOF at a recent senate hearing, said he had seen the PwC report and questioned why the company bothered.
"In my opinion it is a complete waste of time and money," he said. "They are doing another report which they say will be broader. I hope that is the case and this time it will be done properly."
