Opes Prime director Julian Smith angrily dismissed warnings that accounts held at the broker by mining identity Norm Seckold and high-profile lawyer Chris Murphy were a risk to the stockbroking firm, a court has heard.
Mr Smith has pleaded not guilty to two charges of dishonestly breaching his duties as director of companies in the Opes Prime group. Each charge carries a maximum jail term of five years.
Opes Prime, which had more than 650 clients, collapsed in March 2008 owing creditors about $630 million.
The Victorian Supreme Court on Thursday heard that a report by the Opes Prime risk committee identified five key risks to the company, including its reliance on lender ANZ, with which it had a $220 million credit limit, and the influence of key customers Messrs Seckold and Murphy.
In response, Mr Smith accused the committee of a "serious error of judgment" and offered it "an education about the business".
Pointing to his decades of experience, he said the report misunderstood securities lending and borrowing, and had failed to consult with him.
The risk committee report said: "The risk exists that for various different reasons that ANZ could vary the terms of finance or withdraw finance at short notice and thus in the absence of other funding, Opes would need to recall funds from its clients."
It recommended Opes Prime reduce Mr Murphy's facility, worth up to $200 million, scrap his ability to borrow 100 per cent of the value of his stock, and force him to diversify out of Challenger stock.
The committee warned Opes would be "significantly impacted" if Mr Seckold sought back his shares, worth $45 million, which another company associated with Mr Smith and fellow Opes Prime director Laurie Emini, Leveraged Capital, had been using as a buffer.
The Australian Securities and Investments Commission alleges that as Opes Prime teetered on the brink of collapse in March 2008, Mr Smith wrongly pledged assets belonging to two Opes Prime companies in order to secure a loan of $95 million from the ANZ to Leveraged Capital.
Prosecutor Greg Lyon, SC, said Mr Smith "more than just dismissed the issues raised on behalf of the risk committee, he dismissed them and smacks them down as being misinformed and uneducated".
The trial is expected to run for up to 10 weeks.