United Global Capital director banned – July 31, 2024

Joel James Hewish, director of United Global Capital Pty Ltd (UGC), has been banned from providing or performing services within the financial services business for 10 years due to:

• being involved in UGC’s conduct as the responsible manager and key person under the licence;
• showing a “fundamental lack of competence, and a cavalier attitude” regarding the management of the company and towards complying with financial services laws;
• creating a culture of non-compliance and incompetence at UGC; and
• not showing he can be trusted to comply with financial services laws.

UGC’s Australian financial services (AFS) licence was also canceled after findings of speculative investment advice from authorized representatives. Customers were recommended to establish a self-managed superannuation fund and roll over existing superannuation into it, and invest it in highly speculative investments in which Hewish had an interest.

UGC was placed into voluntary administration on July 5. ASIC will continue to investigate the conduct of UGC, Hewish and related entities.

Interim stop orders were also earlier made in July – September 2022 to prevent the offer of shares to retail investors under GCPF’s* prospectus, and the issue of shares due to a deficient target market determination.

* Global Capital Property Fund Limited, a related property investment company.

Both Hewish and UGC have appealed to the Administrative Appeals Tribunal to review the decisions.

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Dominique Grubisa disqualified 18 months – July 31, 2024

The Sydney-based director Dominique Grubisa has been disqualified from managing corporations for 18 months due to her involvement in two failed companies.

Grubisa was the sole director of DGI Accounting Pty – April 2018 to August 2022, and DGI Debt Management Pty Ltd – January 2019 to August 2022. 

She was found not to be meeting the standards of a director, including not performing her duties “with the degree of care and diligence required,” including engaging in insolvent trading.

At the time of ASIC’s decision, the two companies owed a combined total of A$305,623 ($199,419) to unpaid creditors.  

On May 22, 2024, Grubisa sought a review of the decision with the Administrative Appeals Tribunal (AAT), including a stay of the decision and confidentiality orders. A stay of the decision was agreed upon on July 22, with Grubisa remaining as director of Master Wealth Control Pty Ltd for limited purposes. The confidentiality application was dismissed.

Grubisa was also previously banned for four years for claiming to hold Australian financial services and credit licences when she did not. She was also found not fit and proper to engage in financial services or credit activities.

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Suspended AFS license of Id Funds Management Limited – July 31, 2024

The AFS licence of Id Funds Management Limited has been suspended until February 28, 2025, due to failing to meet statutory audit and financial reporting lodgment obligations.

The suspension will be lifted if the obligations are met, and further actions may be considered if they are not.

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Stephen Allen convicted for falsifying signatures on audit documents – July 30, 2024

Stephen Robert Allen, the sole director of K.H.N Holdings Pty Ltd (trading as Alkemade & Associates) has been sentenced to serve a Community Correction Order of 70 hours over 12 months, including fined A$20,000 ($13,061), for making false statements to induce others.

He was also convicted and fined A$2,500 ($1,632) for making a statement knowing it to be false.

Not being a registered company auditor, or having an authorized audit company for K.H.N Holdings, Allen was found falsifying signatures of registered company auditors on over 80 documents regarding audits of financial accounts. 12 separate clients were affected between 2015 and 2020.

He was also found to have falsified a document, pretending to be a registered company auditor, which he lodged with ASIC to obtain consent to resign as auditor of one of those audit clients.

Allen was charged with making falsified documents – breaching s83A(1) of the Crimes Act 1958 (VIC), and for lodging a document with a materially false or misleading statement – breaching s1308(1) of the Corporations Act 2001 (Cth).

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Director Mark Stevens charged – July 30, 2024

NSW director Mark Stevens has been charged with dishonestly causing a financial disadvantage by deception to his company.

Allegedly, Stevens dishonestly had A$110,000 ($71,457) redirected from his company MWCLMS Pty Ltd (in liquidation) to Australasian Justice Services Pty Ltd (in liquidation) in 2016, even though he knew MWCLMS Pty Ltd was in financial difficulty.

The allege offence is a breach on section 192E(1)(b) of the Crimes Act 1900 (NSW), and carries a maximum penalty of 10 years imprisonment.

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Court updates

A$11.3m penalty for Mercer – August 2, 2024

Mercer Superannuation (Australia) Limited has been ordered by the Federal Court to pay a A$11.3m penalty after admitting to having made misleading sustainability statements in some of its superannuation investment options.

A total of seven ‘Sustainable Plus’ investment options had misleading statements, yet were promoted as suitable for those who were deeply committed to sustainability.

Those invested in ‘Sustainable Plus options’ were found having invested in companies involving:

• extraction or sale of carbon intensive fossil fuels – 15 companies;
• production of alcohol – 15 companies; and
• gambling – 19 companies.

“This was ASIC’s first greenwashing case brought before the Federal Court; a landmark case both for ASIC and for the financial services industry.”

ASIC Deputy Chair Sarah Court

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Dr Roger Munro unsuccessful in criminal appeal – July 30, 2024

An appeal by Dr Roger Munro and his conviction on three counts of fraud has been dismissed by the Queensland Court of Appeal.

He pleaded guilty to the fraud charges in May 2022, and was sentenced to four and a half years jail with a non-parole period of 15 months, and released in August 2023.

He was charged after receiving A$299,600 ($195,256) from three investors in 2013-2014, but dishonestly used the funds on personal expenses instead of investing it into his trading scheme, TradeStation Futures Trading Fund.

The Court of Appeal found that “no substantial miscarriage of justice occurred when the primary judge refused to allow Dr Munro to withdraw his guilty pleas in April 2022.”

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ASIC news week 31

New consultation paper under the competition in CS reforms

ASIC has proposed rules to facilitate competitive outcomes in cash equity clearing and settlement (CS) services provided by the ASX Group, and seeks feedback on:

• Implementing the 2017 Council of Financial Regulators Regulatory Expectations for Conduct in Operating Cash Equity Clearing and Settlement Services in Australia as enforceable obligations; and
• imposing further requirements such as technical interoperability, management of intragroup conflicts of interest, and external assurances on pricing and barriers to competition.

ASIC Commissioner Simone Constant said that the rules are also a response to concerns around ASX’s handling of the CHESS replacement program, and that those “will help to ensure that those mistakes are not repeated.”

“We are moving at pace to develop and implement these important rules, which require that during the CHESS replacement program and beyond, the ASX remains responsive to users and does not create barriers to competition.”

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Proposed extend relief for employee redundancy funds

The Commission is proposing to remake and extend ASIC Corporations (Employee redundancy funds relief) Instrument 2015/1150 for five years. It is now due to expire October 1, 2024.

Feedback can be submitted until August 23.

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Credit card debt still a problem for many

Even though lenders have taken measures to help customers, more can be done to help them build better credit card habits, ASIC’s new report showed.  

The report, Credit card lending in Australia: Staying in control, analysed 20 million credit card accounts across 13 lenders over six years.  

“We recognise that lenders have come some way in taking proactive steps to address persistent debt, low repayments and poorly suited products,” said ASIC Commissioner Kate O’Rourke. Yet, there are still many customers, especially younger ones, “who continue to struggle with credit card debt”, she added.

To improve consumer outcomes, Commissioner O’Rourke highlighted actions such as providing alternative account options, targeted reminders and education, and adding measures to enhance target markers as well as identifying financial hardship sooner.