Mr Deegan's November 5 email appears to contradict information given to investors two weeks later.

Mr Deegan's November 5 email appears to contradict information given to investors two weeks later.

Ord Minnett, run by the former head of the Commonwealth Bank's scandal-ridden advice division, Tim Gunning, used a loophole to reap fees that would otherwise have been against the law under Future of Financial Advice (FOFA) rules banning conflicted remuneration.

Advisers at Ord Minnett were temporarily switched to a different financial planning division during a $174 million capital raising for the listed PM Capital Global Opportunities Fund, where Mr Gunning is also a director and shareholder.

In a November 5, 2013, internal email, Ord Minnett's head of compliance, Gary Deegan, said the broking house was prohibited from giving advice to clients on the float "as according to ASIC's view any such advice would be conflicted and a breach of FOFA".

Ord Minnett CEO Tim Gunning.

Ord Minnett CEO Tim Gunning. Photo: Rob Homer

The FOFA laws prohibit most types of conflicted remuneration, where advisers receive payments based on selling particular products to clients.

To get around the prohibition so that advisers could "charge a fee", Ord Minnett "authorised" those who operated under Ord Minnett's financial services licence to temporarily switch to the licence held by a separate company in the group, Ord Minnett Financial Planning.

"This authorisation will elapse after the fund-raising has completed," Mr Deegan said in the email. "It is essential that you obtain the signed consent of the client using the letter that corporate finance have prepared as otherwise you will not be able to charge a fee.

"We apologise for any inconvenience, however we have no choice but to comply with the terms of the legislation as presently drafted."

Mr Deegan told Fairfax Media Ord Minnett charged clients who bought shares in the float a fee of 1.25 per cent, plus GST, but would not say how much money the broker earned from the fee.

"The transaction was undertaken in the best interests of all clients and any client who chose not to sign the fee consent letter received a full refund of the service fee," he said.

Mr Deegan's November 5 email appears to contradict information given to investors two weeks later in the final PM Capital Global Opportunities Fund prospectus, which stated that the shares were being sold under the financial services licence held by Ord Minnett Limited –  not the licence held by Ord Minnett Financial Planning.

However, Mr Deegan said the Ord Minnett Financial Planning licence was used "on the advice of our legal representatives, Herbert Smith Freehills, in order to ensure that the PM Capital offer was undertaken in full compliance with the conflicted remuneration provisions of FOFA".

"‘We understand that our legal representatives consulted with ASIC to ensure that the fund-raising was undertaken in compliance with the conflicted remuneration provisions of FOFA."

Shares in the fund, which invests in equities, debt and cash, were sold to investors for $1 each. Since listing on December 11, they have slumped to close on Friday at 92.5¢.

Mr Gunning joined Ord Minnett, one of Australia's oldest stockbrokers, on October 1, 2009, after six years at the Commonwealth Bank, where he spent his last three years as general manager of Commonwealth Financial Planning.

The behaviour of the division during his tenure, which included allegations of fraud, forgery and a management cover-up, were the focus of a Senate inquiry that last month called for a royal commission into the CBA.

In a February 2008 letter to Mr Gunning, the Australian Securities and Investments Commission said it was "concerned that your data suggests your compliance framework is not adequately detecting serious misconduct".

ASIC said it did not understand why CBA had revoked the authorisation of just 12 of 38 advisers identified as posing a "critical risk" – a risk level that takes in serious misconduct including fraud and dishonesty. Nine of the critical risk planners still work for the CBA.

Mr Gunning has not responded to questions about his time at CBA.

Whistleblower Jeff Morris contacted ASIC in October 2008 after one of the bank's worst planners, Don Nguyen, was promoted.

Mr Morris said the spread of former CBA executives through the financial planning industry underlined the need for a royal commission.

"Some remain at CBA while others continue to work their magic elsewhere in the industry," he said.

Ord Minnett is 70 per cent owned by IOOF and 30 per cent owned by JP Morgan. Both declined to comment.

ASIC spokesman Andre Khoury said it was "not appropriate to provide running commentary via the media on the conduct of those people/entities we regulate".