Director sued for breaching director’s duties – August 4, 2023
Paul Ryan, director of Dixon Advisory & Superannuation Services Pty Limited, faces a civil penalty for allegedly breaching his directors’ duties.
According to ASIC, Ryan breached his duties by his involvement in decisions believed to have been to the advantage of Dixon Advisory’s holding company, E&P Operations Pty Ltd, including failing to properly consider the interests of Dixon Advisory’s creditors.
Earlier in 2020, Dixon Advisory faced claims in relations to advising clients to invest in the US Masters Residential Property Fund (URF) and URF-related products, which were issued and operated by related companies to Dixon Advisory. These included:
- a proceeding issued by ASIC in the Federal Court where Dixon Advisory was to pay a A$7.2m ($4.75m) penalty and $1m ($660,000) towards ASIC’s costs;
- complaints made to the Australian Financial Complaints Authority; and
- three court proceedings in the Federal Court, including two class action proceedings.
In late December 2021, ASIC alleges that Ryan was involved in:
- amending the constitution of Dixon Advisory to authorize its directors to act in the interest of E&P Operations (where he was a director too); and
- executing a deed of acknowledgement of debt (Deed) between Dixon Advisory and E&P Operations to the advantage of E&P Operations but damaging to Dixon Advisory.
When the Deed was entered, ASIC further alleges that:
- E&P Operations owed Dixon Advisory over A$19m ($12.5m);
- Dixon Advisory was heading towards insolvency and therefore its directors were obligated to consider the interests of creditors;
- the Deed imposed conditions which adversely affected Dixon Advisory’s right to recover the A$19m debt.
“The creditors included thousands of financial advice clients who had invested in the US Masters Residential Property Fund and financial products operated by entities related to Dixon Advisory. These creditors suffered significant losses.”
Sarah Court, Deputy Chair, ASIC
Suspended AFS licence for NWQ Capital Management – August 3, 2023
The Australian financial services (AFS) licence of NWQ Capital Management Pty Ltd has been suspended until January 25, 2024 over failings to maintain financial requirements by not having sufficient net assets.
With the suspension, NWQ Capital cannot provide financial services or issue new interests in investment schemes. They can provide services that are necessary for, or incidental to the day-to-day operation, winding-up or appointment of a replacement trustee to the schemes.
Former director guilty of dishonest conduct and misuse of position – August 3, 2023
The former director Mudasir Mohammed Naseeruddin, who was arrested and charged in 2020, has now pleaded guilty to two counts of dishonest conduct, and to two counts of failing to discharge his duties as a director in the company’s best interests.
Naseeruddin was found encouraging investors to rollover their superannuation monies into newly created self-managed superannuation funds and then lent it to the two companies, Secure Investments Pty Ltd and Aquila Group Pty Ltd – of which he was a director of both.
Between about May 13, 2015 and about January 6, 2020, Naseeruddin dishonestly obtained more than A$520,000 ($340,979) from six investors who believed that the money would be invested in property developments. But only a small part of the funds was properly invested.
Later, between July 14, 2016 and 23 December 23, 2019, he also dishonestly withdrew over $550,000 ($360,651) from Secure Investments Pty Ltd in order to purchase shares in a security company for his own benefit.
A plea hearing takes place on December, 6 2023.
The maximum penalty for the offence of dishonest conduct while running a financial services business, contrary to section 1041G of the Corporations Act 2001, is 10 years imprisonment for offences committed up to March 12, 2019 and 15 years after that.
For breaching directors’ duties, contrary to section 184(2) of the Corporations Act 2001, the maximum is five years imprisonment for offences committed up to March 12, 2019, and 15 years for later offences.
Former café owner sentenced to good behaviour bond – August 2, 2023
Shaobo Hu, A former company director of Bydcafe Ashburton Pty Ltd, has been sentenced to a 12-month good behaviour bond after being convicted for providing false information to the Australian Tax Office.
On July 28, Hu pleaded guilty to one charge of attempting to obtain a financial advantage by trying to deferring the payment of a debt owed by Bydcafe to the Deputy Commissioner of Taxation.
Hu was sentenced under section 20(1)(a) of the Crimes Act 1914 (Cth).
Former investment manager charged with creating fraud documents – July 31, 2023
Brett Paul Trevillian, a former investment manager, has been charged with four counts of creating false documents to obtain a financial advantage under s253 of the Crimes Act.
Allegedly, between May 2019 and October 2019, Trevillian, the director of Metal Alpha Pty Ltd and former investment manager of Trading Life Services Pty Ltd, created four forged portfolio performance verification reports which were later given to potential investors.
Each charge under s253 of the Crimes Act 1900 (NSW) carries a maximum sentence of 10 years imprisonment.
In other ASIC news, on August 2, ASIC sent out a warning to market participants that the Commission will continue to take actions against market misconduct. For the first half of the year, over A$109.1m ($71.6m) in civil penalties have been imposed by the courts.
“Promoting market integrity and addressing misconduct that places consumers and investors at risk are enduring priorities for ASIC. Our commitment to insider trading and market manipulation deterrence continues and we expect further action for related misconduct in the coming months,” said Sarah Court, ASIC Deputy Chair.
| Summary of enforcement outcomes January 1 – June 30, 2023 | Total |
|---|---|
| Criminal charges laid against individuals prosecuted | 125 |
| Civil penalties imposed by the courts | A$109.1m ($71.6m) |
| Investigations commenced | 70 |
| Investigations ongoing | 144 |
| Individuals disqualified or removed from directing companies | 19 |
| Individuals banned or suspended from providing financial services or engaging in credit activities | 46 |
On August 3, the Commission welcomed the establishment of an ASX Advisory Group and the appointment of Alan Cameron AO as Independent Chair.
The new Advisory Group will advise ASX Clear and ASX Settlement on strategic clearing and settlement issues, including inputs on the governance of the ASX CHESS replacement project.