The Australian Securities and Investments Commission (ASIC) has fired a shot over the bows of funds managers at the same time as announcing that it had successfully moved against Mayfair 101 in the Federal Court leading to winding up orders.
The regulator announced that the Federal Court had ordered the winding up of M101 Nominees Pty Ltd, which issued secured debentures promoted by Mayfair 101 known as M Core Fixed Income Notes.
At the same time as announcing the successful Federal Court action, ASIC’s acting chair, Karen Chester pointed to further possible action against fund managers.
Referencing the Mayfair 101 action, Chester said it had moved decisively early last year, directly and then ultimately through the courts, to restrain Mayfair from promoting the allegedly misleading products and to protect not only potential new investors but also the interests of existing investors.
“This action is one of several we have underway (under our project True to Label) targeting fund managers not doing the right thing by investors. Especially those fund managers preying on unsophisticated investors, such as older Australians and retirees in regional Australia,” she said.
The formal ASIC announcement said the Federal Court winding up orders represented the first final outcome arising from ASIC’s court actions issued against Mayfair 101 Group companies and their director James Mawhinney.
“In this action, ASIC sought to protect the assets of M101 Nominees and the interests of M Core noteholders in circumstances where:
- the product issuer had informed current investors of a liquidity event;
- there appeared to be insufficient funds to repay investors; and
- external administrators appointed to other products issued by the Mayfair 101 Group had raised concerns about how the investments had been dealt with to the detriment of investors.
On 29 January, 2021, the Court ordered that M101 Nominees be wound up on just and equitable grounds, and appointed Said Jahani and Philip Campbell-Wilson of Grant Thornton as liquidators, after having previously appointed them as provisional liquidators in order to preserve the assets of the company pending the determination of ASIC’s winding up application.
M101 Nominees raised approximately $67 million from investors during 2019 and 2020 based on representations that funds invested would be fully secured, when they were not. M101 Nominees stopped repaying funds to investors in March 2020 and froze interest payments to investors from June 2020.
“ASIC is also seeking orders that Mr Mawhinney, be permanently restrained from certain activities, including advertising any financial product and soliciting funds in connection with any financial product,” ASIC said.
