Paul Nielsen was hit with the ban for his role in the operation of the managed investment schemes by Linchpin and Endeavour. ASIC found Nielsen's conduct in approving the investment of funds of the Investport Income Opportunity Fund in related entities constituted multiple contraventions of the Corporations Act.
Ex-Westpac, Commonwealth FP adviser, Peter XU, banned
Gold Coast director and property developer sentenced to eight years’ imprisonment
“Owing investors approximately $9 million (17-246MR). Many of the investors were pensioners and were approached by telemarketing or word of mouth. Investors were convinced to borrow against their homes and were told that their money would be used to develop property in Tasmania. Instead, the money paid by investors was used to pay back interest owed to other investors, payments to employees, cash withdrawals and transfers to personal bank accounts.”
Financial advice firm to pay $1 million penalty for breach of best interests duty
ASIC permanently bans Gold Coast financial adviser Mr Satvir Singh Birk
ASIC Warns Consumers About Investment Scams
ASIC Deputy Chairman Peter Kell said, 'The Targeting Scams report published today by the Australian Competition and Consumer Commission (ACCC) shows reports to Scamwatch on investment scams increased in 2016. ASIC is alerting the public to ways to stay informed and protect themselves from scams.
16-392MR ASIC bans former Sentinel Private Wealth adviser for five years
ASIC has banned Stephen Michael Beckton, a financial adviser and former authorised representative of Sentinel Private Wealth Pty Ltd (Sentinel), from providing financial services for five years.
ASIC found Mr Beckton did not comply with financial services laws on a number of occasions.
An ASIC review of Mr Beckton's advice found that he had recommended clients change superannuation and insurance products in circumstances where there was little benefit, but significant cost, to the client in changing. This advice benefited Mr Beckton through increased adviser fees and commissions he received from insurers. In doing so, Mr Beckton:
- failed to act in the best interests of his clients, by:
- failing to conduct a reasonable investigation of their existing superannuation and insurance products; and
- giving them advice that may have left them in a worse position than if they had not followed his advice;
- failed to provide appropriate advice to his clients;
- failed to accurately disclose the fees associated with his advice; and
- failed to put the interests of his clients ahead of his own, when he knew that there was a conflict of interest.
ASIC Deputy Chair Peter Kell said, 'Financial advisers must put their clients' interests ahead of their own. Super switching that provides little benefit to the client but is very profitable to advisers is clearly unacceptable.'
Mr Beckton's banning will be recorded on ASIC's register of financial advisers.
Mr Beckton has a right to appeal to the Administrative Appeals Tribunal for a review of ASIC's decision.
Background
Mr Beckton was a representative of Sentinel from September 2013 to October 2016.
ASIC published Information Sheet 182 (INFO 182) in August 2013. INFO 182 provides information and compliance tips for financial advisers who provide super switching advice.
16-377MR ASIC permanently bans Brisbane financial adviser
ASIC has permanently banned Mr George Karakatsanis, of Yeronga, Queensland from providing any financial services. ASIC found that he engaged in conduct that was misleading and deceptive whilst recommending clients invest in unsecured fixed interest notes in Protect Ensure. ASIC also found he failed to comply with financial services laws.
Mr Karakatsanis has been an authorised representative of various Australian Financial Services Licencees since 2003. Between 16 July 2012 to 22 May 2014 Mr Karkatsanis was an Authorised Representative of Protect Ensure Pty Ltd.
ASIC found that Mr Karakatsanis:
- engaged in conduct that was false and misleading by making false statements about the features of financial products that were likely to induce clients to acquire the products;
- deliberately misled clients so that they did not understand the basic features of the financial products he was recommending they invest in;
- engaged in misleading and deceptive conduct by failing to properly disclose that investor funds were being invested in Protect Ensure and thus constituting a direct conflict of interest;
- failed to act in his clients' best interests by failing to disclosure this conflict of interest;
- failed to act in his clients' best interests by ignoring their circumstances, objectives, financial situations and needs when recommending they invest in Protect Ensure;
- failed to give provide appropriate advice; and
- failed to provide Statements of Advice.
Subsequently, partly due to Mr Karakatsanis' conduct, clients' funds were used improperly, such as to pay Protect Ensure's business related expenses. As a result, some investors lost their invested funds entirely.
ASIC has determined that Mr Karakatsanis is not of good fame and character, making him an unsuitable person to provide financial services.
'Mr Karakatsanis's conduct falls far short of the high standards expected of those in the financial services industry. ASIC will continue to protect consumers from advisors who engage in misleading conduct and place their interests above those of their client.' ASIC Deputy Chairman Peter Kell said.
Mr Karakatsanis has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC's decision.
Background
On 15 December 2014, ASIC cancelled the AFS Licence of Protect Ensure as a result of Protect Ensure not having adequate financial resources to provide the services covered by the Licence and to carry out supervisory arrangements as required by s912A(1)(d) of the Corporations Act. (refer: 14-338MR).
Protect Ensure was placed into liquidation on 12 June 2015.
On 30 June 2015, ASIC permanently banned Mr Lee Robert Robin, of Camp Hill, Queensland from providing any financial services. ASIC found that he engaged in conduct that was misleading or deceptive whilst issuing unsecured fixed interest notes in Protect Ensure. (refer: 15-161MR).
16-327MR Former financial adviser charged over fraud
Former financial adviser, Gabriel Nakhl, appeared in the Local Court of New South Wales yesterday on 19 charges brought by ASIC of engaging in dishonest conduct with investor funds.
ASIC alleges that Mr Nakhl, of Illawong, NSW knowingly engaged in dishonest conduct in relation to twelve investors by:
- misleading them about the investments he would make on their behalf and on behalf of their self-managed superannuation funds, including how he would invest their money and the risks and returns of the investments he recommended;
- using money provided to him by investors, including money from investors' self-managed superannuation funds, for purposes other than those he said he would use it for;
- telling investors that their investments were performing well when this was not the case; and
- attempting to cover-up and conceal his wrongdoing.
The alleged conduct occurred between March 2009 and March 2011 while Mr Nakhl was an authorised representative of Australian Financial Services Limited (in liquidation) and from about March 2011 to about September 2013 while he was the sole director of SydFA Pty Ltd (in liquidation).
The charges were brought against Mr Nakhl following an ASIC investigation.
Mr Nakhl did not enter a plea but asked for an adjournment to obtain legal advice.
The matter was stood over until 11 October 2016.
The Commonwealth Director of Public Prosecutions is prosecuting the matter.
Background
Mr Nakhl has been charged with 19 counts under section 1041G of theCorporations Act 2001 (Cth).
In February 2013, ASIC obtained court orders against Mr Nakhl preventing him from disposing of, dealing with or otherwise diminishing certain assets. See 13-023MR for more details.
In September 2013, Mr Nakhl became a bankrupt and placed SydFA Pty Ltd into liquidation.
In November 2013, ASIC accepted an enforceable undertaking from Mr Nakhl that permanently restricts him from providing financial services and restricts him from managing a corporation for 15 years. See 13-313MR for more details.
16-326MR ASIC acts to freeze sale of land proceeds in excess of $100 million pending disclosure to investors
Following an application made by ASIC on 19 August 2016, the Federal Court of Australia has made orders limiting the ability of Aviation 3030 Pty Ltd (Aviation) to deal with the proceeds of sale of property it owns in Victoria.
The Aviation property was purchased in 2011 by Aviation, which raised funds for this purpose from around 70 shareholders and unitholders.
Aviation consented to the orders being made.
ASIC commenced its investigation into Aviation in May 2016. In the course of its investigation, ASIC became aware that:
- in March 2016, Aviation had issued shares to companies associated with a director and a former director of Aviation, purportedly pursuant to an Aviation letter dated 4 May 2011 and an option agreement dated 18 September 2012 entered into by the then directors of Aviation ('the 2016 share issue');
- this resulted in a substantial dilution of the interests of investors, and an increase in the interests controlled by the directors of Aviation and their associates;
- neither the 4 May 2011 letter nor the 18 September 2012 option agreement had been disclosed to investors prior to their investments in Aviation and the 2016 share issue had also not been disclosed to all investors; and
- in May 2016, Aviation received an offer from a third party to purchase the Aviation property for more than $100 million and that this offer had not been disclosed to all investors. ASIC's understanding was that this property was expected to be sold within a short timeframe.
Based on these matters, ASIC was concerned that the proceeds of sale of the Aviation property would be distributed in accordance with the 2016 share issue. This was in circumstances where investors had not been provided with proper disclosure in relation to the dilution of their interests, either at the time of their investments or subsequently.
ASIC obtained the orders to protect the interests of investors and specifically to enable them to be provided with:
- information as to the 2016 share issue (and the documents purportedly relied upon by Aviation for that purpose);
- details of the proposed sale of the Aviation property; and
- an opportunity to decide whether to obtain independent advice concerning their investments.
As part of an agreement reached with ASIC, Aviation undertook to provide disclosure to the Investors in relation to these matters, in a form agreed to by ASIC. Aviation has advised ASIC that it has completed this process.
Developments subsequent to the orders
Aviation has advised ASIC that the offer to purchase the Aviation property has been withdrawn.
The Orders will remain in place until further order of the Federal Court. The matter returns to the Federal Court on 25 November 2016.
ASIC's investigation into Aviation is ongoing.