Four directors of Endeavour Securities and Linchpin Capital Group have been ordered to pay $390,000 by the Federal Court for multiple failings on a registered managed investment scheme.
Ian Williams, Paul Raftery, Paul Nielsen and Peter Daly were found in April 2023 to have breached their duties as officers of a responsible entity of a registered managed investment scheme and did not act in the best interests of members.
Endeavour was the responsible entity of a registered managed investment scheme called the Investport Income Opportunity Fund. Linchpin operated an unregistered managed investment scheme, which was also called the Investport Income Opportunity Fund. Both funds were placed into liquidation in 2019.
The Court previously found that between 2015 and 2018, the four individuals:
- Did not take all reasonable steps to ensure that Endeavour complied with its compliance plan, obtain member approval for related party loans and issue Product Disclosure Statements that complied with the law;
- Failed to exercise care and diligence;
- Did not act in the best interests of members of the Investport Income Opportunity Fund.
It also found Daly and Raftery improperly used their positions by receiving unsecured loans from the unregistered Investport Income Opportunity Fund for their personal use with Daly receiving a $130,000 loan and Raftery receiving $40,000.
Nielsen and Williams will each pay a $100,000 penalty and be banned from managing corporations for four years. Raftery will pay a $40,000 penalty and be banned from managing a corporation for three years.
Daly, who was the sole director to contest ASIC’s case, will pay a $150,000 penalty and be banned from managing corporations for five years. Justice Cheeseman specifically noted Daly demonstrated a “lack of remorse or contrition”.
Nielsen, Raftery and Williams agreed to each pay $175,000 towards ASIC’s costs while Daly has also been ordered to pay $175,000 in addition to a further proportion of ASIC’s costs associated with the contested hearings.
In November 2019, ASIC banned the four from providing any financial services each for a period of five years.
ASIC deputy chair, Sarah Court, said: “ASIC took this case because we believed reasonable steps were not being taken by the directors to comply with their own compliance plan and obtain member approval for loans.
“Today’s penalties are significant and should act as a reminder to directors of responsible entities that operate managed investment schemes that they must act in the best interests of members.”
Talk about getting off lightly! Until people like this are sent to jail, this behaviour will not stop. This is not the first time these exact people have done this and they will pay $0 as the have no assets or income to their name so they will declare themselves bankrupt and move on to the next victims using their spouse or children as the “directors” of whatever nonsense scheme or company they will come up with next to cover the legal fees they have to pay for this current debacle. Peter Daly showed no remorse – why would he? He sees himself as the victim here because in the minds of people like this, his benchmark for success is those who have successfully done the wrong thing, hurt many but got off and walked away with millions while poor Peter did not.