Federal Court winds up unregistered MIS and disqualifies director

The Federal Court has ordered that an unlicensed financial adviser be permanently restrained from carrying on a financial business and has wound up her unregistered managed investment scheme.

Monica Kaur and her husband, Sadu Singh, were directors at various times of MKS Property.

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Between March 2017 and December 2020, Kaur was believed to have encouraged some 300 investors to establish self-managed superannuation funds (SMSFs) and advised them to invest in property investments and developments set up by MKS Property.

The Court found Kaur and MKS Property operated an unregistered managed investment scheme without a licence or the required registration, and disqualified her from managing corporations for life.

It found that Singh breached his directors’ duties by failing to exercise his powers and discharge those duties with the degree of care and diligence that a reasonable person would exercise, and he was disqualified from managing corporations for 15 years. 

“ASIC is actively engaging with industry and consumer advocacy groups to raise awareness about the risks associated with unlicensed advisors and providing guidance on identifying legitimate financial professionals,” said Tim Mullaly, ASIC executive director for financial services enforcement. 

“ASIC is committed to safeguarding the interests of consumers and upholding the integrity of the financial services sector, sending a clear message that unlicensed practices will not be tolerated.”

MKS Property would now be wound up. David Hodgson and Andrew Hewitt of Grant Thornton were appointed as receivers of the property of and as liquidators of the scheme and MKS Property.  

In December 2020, ASIC had obtained urgent interim travel restraint and asset freezing orders against Kaur, MKS Property, Paradise Property Group Pty Ltd, as well as against Singh and two other individuals. 

In handing down his decision, Justice Jackson said, “The venture into which Ms Kaur directed investor funds was risky and speculative as is shown by the likelihood that most if not all of the funds of many of the investors have been lost. 

“Inadequate record keeping and a lack of controls over what was done with the funds are likely to exacerbate the losses and the difficulty of making any recovery on behalf of investors. 

“The losses are going to be in the millions of dollars and are likely to impact on the retirement savings of many individuals.”