Mr Kelaher made the explosive admission at a Senate hearing on Tuesday when he was grilled over allegations the financial services company covered up poor behaviour by staff. IOOF, which has a market value of $2.6 billion, sells financial advice, superannuation, investment management and trustee services.

Mr Kelaher confirmed the company investigated its head of advice research, Peter Hilton, in 2009 and in 2014 for potential front running through a relative's account. Front running is buying shares ahead of a client to benefit from any price increase from the increased demand.

Mr Kelaher confirmed a former staff member, Edward Youds, was investigated for insider trading. He said the company determined that neither man had broken the law.

ASIC was made aware of the allegations after they were revealed by Fairfax Media. "This kind of behaviour [front running and insider trading] is actually alien to our company," he said.

"The issue of front running was revisited after 2008-2009 essentially around Christmas of 2014. My understanding, early in the period of calendar 2014 was the issue of asset registers and sharing passwords.... The other issue was plagiarism [of JPMorgan's research reports]" he said.

"Is that the faulty research reports?" Senator Sam Dastyari asked, to which Mr Kelaher replied: "Yes".

Mr Kelaher repeatedly said a company had no obligation to report a suspicion of front running or insider trading.

ASIC regulatory guide 238 states a company that is a market participant, such as Bridges Financial where Mr Hilton worked, must report a suspicion of either front running or insider trading.

In regards to Mr Youds' suspected insider trade, Mr Kelaher said: "It was resolved that it was in fact at best a breach of Chinese Wall arrangements."

Internal emails show Mr Youds received a first and final warning and was requested to donate the profit he made from the transaction to a charity of the company's choice.

Wilting under heavy questioning from Senator Dastyari, Senator John Williams and Senator Sean Edwards, Mr Kelaher said he had trouble recalling when he first became aware of a complaint filed by an IOOF staff member in December, 2014. Initially, Mr Kelaher said he learned of the tip-off in the past week through the press. He later corrected his recollection after being read an email that showed he was aware of the complaint.

Mr Kelaher was unsure of whether his compliance staff had made him aware the company had hired PricewaterhouseCoopers to conduct the review of December 2014 front running allegation: "I'd have to check my recollection."

IOOF has paid PwC to review allegations of misconduct in the firm on three separate occasions in the past 18 months. The most recent review was conducted in the past few weeks.

Senator Dastyari put PwC on notice that the Senate committee would consider calling the partner in charge of the reviews. "It reeks of a whitewash," he said.

Mr Kelaher refused to be drawn by Senator Dastyari on whether IOOF was in crisis mode.

"Let's not pussy foot around this. A 16 per cent share price drop in the shares of your company surely must be a concern to you," Senator Dastyari asked.

"The market goes up and the market goes down," Mr Kelaher responded.

Responding to questions from Senator Williams, Mr Kelaher admitted Mr Hilton had received two final warnings. "How many final warnings can you get before you are terminated?" Mr Williams asked incredulously.

Senator Williams also asked Kelaher questions that relate to the company's reporting of financial planners to ASIC. The questions followed revelations in Fairfax Media that IOOF had compensated 57 clients in the past two years and was reviewing the client files of a Perth-based planner who had never been reported to ASIC.

Mr Kelaher was asked about his relationship with a fund manager who published a glowing report on IOOF attacking the reporting in Fairfax Media this week by Senator Edwards. "He's an acquaintance," Mr Kelaher said.

His comments at the hearing follow an investigation by Fairfax Media that showed senior staff at IOOF engaged in alleged misconduct including insider trading, claims of front-running, misrepresentation of performance figures, and junior staff asked to cheat on training and compliance modules on behalf of their boss.

Mr Hilton is at the centre of allegations getting staff to cheat on compliance and training modules on his behalf and an internal investigation into possible front running on behalf of a relative.

Internal documents seen by Fairfax Media show Mr Hilton received a final warning in May 2009 and then another final warning in mid 2014 for a password breach.

Litany of wrongdoing at IOOF

Around the same time IOOF revoked Mr Hilton's responsible manager status after an internal investigation found he had instructed direct reports to complete his Kaplan and compulsory e-training modules.

An action plan also revealed IOOF misrepresented performance figures. Mr Hilton did not attend the hearing and is currently on leave from the company.