IN A shock development, the corporate wallopers' latest targets of alleged multimillion-dollar bad behaviour in the financial world were based on Queensland's Gold Coast - just like the last half-dozen.
The Australian Securities and Investments Commission's dogged pursuit of groups selling financial advice and products, but lacking licences, training or approvals, could present a serious problem for the state's fledgling Premier, Campbell Newman, given that these outfits seem to make up the principal economic activity in the region.
Two days after ASIC successfully won restraining orders in the Federal Court in Melbourne, it decided to reveal that it had clamped the wheels of a self-managed superannuation funds advisory group while the court determines whether further action is warranted.
The twin companies, Royale Capital and ActiveSuper, are run by Justin Gibson and Jason Burrows and, says ASIC, managed to amass $4.75 million from more than 200 investors.
If ASIC is right, a goodly portion of that money was put into shares of companies incorporated in both the British and US Virgin Islands, which were supposed to be vehicles for investing in distressed properties in the US.
ASIC gave no hints on how much of the money is at risk, or where it is, but it did obtain blanket orders from the court to try to stop remaining funds in client, company and US bank accounts being touched until the matter returns to court later this month.
Curiously, the ASIC statement said that "Royale and Justin Gibson consented to the orders", but made no comment about Burrows' attitude to the freeze.
Insider suspects that Burrows and Gibson have been on ASIC's radar for some months because, until last November, Royale held a financial services representative licence courtesy of Romad Financial Services - a company whose principal, Melbourne man Rory Deutsch, was handed a four-year ban from the industry last December for failing to comply with financial services laws. Romad's licence was also cancelled.
Royale then persuaded Sydney-based Spring Financial Group to let it operate under its licence, although ASIC records suggest it was allowed only to offer general financial advice and not sell products. Spring Financial terminated the licence relationship in mid-June, although it is not clear whether that was a result of ASIC intervention.
ASIC's statement yesterday claimed that Royale and ActiveSuper had been operating an unlicensed financial services business, engaged in "unsolicited hawking" of products, lacked adequate product disclosure and provided misleading/deceptive information to investors.
Insider tried to make contact with Burrows and Gibson, but was unsuccessful prior to publication.
That ASIC is swinging the spotlight onto the SMSF industry is hardly surprising because the $400 billion industry is an obvious target for the less scrupulous.
Leckie stays true to form
Even on the way out the door, Seven West Media former chief executive David Leckie has remained true to form, and managed to be involved in a minor controversy - this time upsetting the ASX calendar watchers.
Leckie's final shareholding notice as a director was only filed with the ASX yesterday, in spite of the fact that he left on June 30, which means it was three days late.
Seven West company secretary Peter Bryant manfully took the blame for the missed deadline, saying it was due to an "administrative oversight" that was soon fixed.
For the record, Leckie has slightly more than 750,000 Seven West shares, but cannot deal in them until after the release of this financial year's results. He also has about 127,000 performance shares that vest over the next two years, presuming they clear preset hurdles.
At the rate Seven West's shares are heading south, Leckie's late filing was probably him deliberately suppressing conscious recollection of the investment. Since April they have come down from $4 to a shabby $1.60 - costing him nearly $2 million. Mind you, his boss, Kerry Stokes, has lost just a tad more.
Perpetual raises its bet
Perpetual has wasted little time in restoring itself as a substantial shareholder in Star Casino owner Echo Entertainment Group after receiving gaming authority approval to lift its holding beyond the 10 per cent statutory limit.
The funds management group has raised its bet at Echo, where chairman John Story has already been flushed out as James Packer's Crown and Malaysia's Genting Group up the ante in a high-stakes poker game.
Perpetual sold down, but not out, earlier this year and does not appear to have had to buy too many shares to break above the 5 per cent disclosure limit - but it has been a concerted acquirer since the approval came through at the beginning of this month.
Frequently Asked Questions about this Article…
What did ASIC allege about Royale Capital and ActiveSuper in the Gold Coast SMSF matter?
ASIC says Royale Capital and ActiveSuper operated an unlicensed financial services business, engaged in unsolicited hawking, failed to provide adequate product disclosure and gave misleading or deceptive information. The regulator obtained court orders to freeze funds while it decides whether further action is warranted.
How much money did Royale and ActiveSuper reportedly raise and from how many investors?
ASIC says the twin companies run by Justin Gibson and Jason Burrows managed to amass about $4.75 million from more than 200 investors.
Where did ASIC say investor money was allegedly invested by Royale and ActiveSuper?
ASIC alleged that a significant portion of investor funds was put into shares of companies incorporated in the British and US Virgin Islands, which were presented as vehicles for investing in distressed US property.
What immediate protections did ASIC secure for investors’ funds in this case?
The regulator obtained blanket court orders to try to stop remaining funds in client, company and US bank accounts from being touched until the matter returns to court later in the month.
What prior licence relationships did Royale have before ASIC’s action?
Until last November Royale held a financial services representative licence through Romad Financial Services (whose principal, Rory Deutsch, was later banned). Royale then operated under Sydney-based Spring Financial Group’s licence but allegedly only with permission to offer general advice; that arrangement was terminated in mid-June.
Why is ASIC focusing on the SMSF industry and what does that mean for everyday investors?
ASIC is targeting parts of the SMSF industry because the $400 billion sector can attract less scrupulous operators. For everyday investors, it means regulators are actively policing unlicensed advice and product hawking, and investors should be cautious about advisors or schemes that lack clear licensing and disclosure.
What was the controversy involving Seven West Media’s outgoing director David Leckie?
David Leckie filed his final shareholding notice three days late after leaving on June 30. He holds slightly more than 750,000 Seven West shares and about 127,000 performance shares; the article notes his holding has lost value as the share price fell from about $4 to $1.60.
What recent move did Perpetual make regarding Echo Entertainment (Star Casino owner) and why might investors care?
Perpetual received gaming authority approval to lift its holding in Echo Entertainment beyond the 10% statutory limit and has been increasing its stake. Investors may care because changes in substantial ownership can affect company control dynamics and share-price moves, especially in contested situations involving other bidders like Crown and Genting.
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