The Australian Securities and Investments Commission (ASIC) has commenced civil proceedings in the Queensland Supreme Court against four former officers and three subsidiary companies of the formerly-listed MFS Ltd, now known as Octaviar.
The regulator said the proceedings related to the use of $147.5 million in funds of the Premium Income Fund (PIF), of which MFS Investment Management, now known as Managed Investments Limited, was the responsible entity.
ASIC named the defendants in the matter as the former chief executive and director of MFS Limited and MFS Investment Management, Michael King, deputy chief executive Craig White, the former chief executive of MFS Investment Management, Guy Hutchings, the former chief financial officer and company secretary of MFS Limited, David Anderson, and a former fund manager with MFSIM, Marilyn Watts.
The regulator also said action had been commenced with respect to Managed Investments Limited, Octaviar Administration Pty Ltd and Octaviar Castle Limited.
ASIC said it was seeking orders for declarations of contraventions, pecuniary penalties, compensation and disqualifications from managing corporations.
The regulator said it would be alleging that in November 2007, officers of MFSIM caused PIF to transfer $130 million to MFS Administration Pty Ltd so that MFS Administration could use those funds to pay the financial obligations of other MFS Limited subsidiaries, including $103 million owed to Fortress Credit Corporation (Australia) Pty Ltd by MFS Castle Pty Ltd.
ASIC said it would also allege that in December 2007 officers of MFSIM caused PIF to transfer $17.5 million to MFS Pacific Finance Ltd, a New Zealand registered company.
It would also be alleged that in about January last year, officers and the fund manager of MFSIM created and used false documents relating to the use of the $147.5 million, as a result of which it would be alleged that PIF suffered a loss of $147.5 million.