TheAustralian Securities and Investments Commission(ASIC) has backed up its promise of taking a ‘hard line’ against solicitors’ mortgage schemes, appointing a liquidator to wind up two Tasmanian solicitors’ mortgage investment schemes.
The Lewis Driscoll and Bull scheme, with a capital value of $2 million, and the McCulloch and McCulloch scheme with $1 million in capital value, will be wound up to provide more than 240 investors in both schemes with the opportunity to maximise the returns from their investment, according to ASIC.
The orders obtained to appoint a liquidator to the Hobart-based mortgage schemes were granted in the Federal Court on Friday, allowing ASIC to appoint liquidator John William Woods to wind up the schemes. Nineteen loans – 12 in the Lewis scheme and 17 in McCulloch – will be wound up as a result of the ASIC action.
“The liquidator has orders to consult with investors in their administration of the loans, and will provide regular reports to ASIC and to investors in the scheme,” ASIC Tasmanian regional commissioner Simon Dwyer says.
In April, the securities watchdog handed down a damning report on solicitors mortgage schemes and vowed to beef up the regulatory approach towards the few schemes which survived its year long campaign against such promoters.
The report found that mortgage schemes were typified by a chronic lack of management expertise, as well as poor default management practices, non-existent or exaggerated property valuations, and misleading disclosure to investors of information material to their investment in the schemes.
The report also recommended tougher legislative requirements that forced promoters to obtain independent valuation of their schemes and introduce maximum loan valuation ratios, as well as requiring promoters to advise investors of loan defaults.
“These findings provided all the incentive we needed to take a hard line about closing these schemes down,” ASIC chairman David Knott said at the time the report was released.
