TheAustralian Securities and Investments Commission(ASIC) has taken one investment adviser to court, put two behind bars and banned a stockbroking representative in separate matters over the last few days.
The securities watchdog has begun proceedings in the New South Wales Supreme Court against former unit trust manager Leslie Reginald Nelson and a number of companies owned and controlled by him.
The industry watchdog has alleged Nelson diverted money out of a number of unit trusts he managed, which held about $3.7 million from 120 predominantly retiree investors, into an olive grove investment project without the investors’ knowledge.
ASIC has also alleged Nelson is not a licensed investment adviser and the unit trusts are not registered with ASIC, nor are the unit trusts’ investments in the olive grove project properly documented or secure.
In light of concerns about the viability of the olive grove project, ASIC has obtained Supreme Court orders freezing Nelson’s assets.
An interim report to creditors and investors is due on November 5, 2001 from the appointed receiver and manager to the trustee companies and those companies involved in the olive grove project, and the case is due back in court on December 10.
In a separate case, a New South Wales adviser has been found guilty of 50 charges brought against him by ASIC, relating to more than $5.3 million of former clients’ investment funds.
Kerry John Burke, who has been remanded in custody to await sentencing, pleaded guilty before the Commonwealth Director of Public Prosecutions to 11 charges of fraudulently using a false instrument. The charges primarily related to Burke generating documents that released client’s funds from accounts, while 39 other charges made against Burke were for using false representation to dishonestly obtaining a financial advantage for companies associated with him.
The 11 charges of fraud carry a maximum jail sentence of 10 years and the other charges carry a maximum of five, according to an ASIC spokesperson.
In another case, a Melbourne investment adviser has received a two year and four month jail sentence for promoting a series of horse race betting schemes.
Kevin Anthony Gaw pleaded guilty in the Melbourne County Court to four charges of operating an unregistered managed investment scheme and four charges of inducing others to invest in securities by making false and misleading statements.
ASIC investigations found that in a 12 month period Gaw promoted horse racing betting schemes, inducing more than $470,000 from investors with the false statement that investments were fully guaranteed against loss. At the time of the offences Gaw was also an undischarged bankrupt.
Gaw’s sentence carries a minimum of eight months and he has also entered a good behaviour bond for 28 months.
A New South Wales based stockbroker, Daniel Kenneth Moye, has also felt the wrath of ASIC after being banned from acting as a representative of a securities dealer or investment adviser for four years.
Following its investigations into the former representative of Findlay & Co Stockbrokers, the industry watchdog found Moye failed to perform his duties as a representative efficiently, honestly and fairly while working for the company during 1999 and 2000.
ASIC found Moye used a false name to open an account with Findlays and traded on the account while pretending to receive instructions from an external client. The trades, mostly on credit, resulted in a loss of $313,000 to the stockbroking firm.
Further loses were also incurred to Findlays, taking the total loss up to about $340,000, when Moye informed a new investor they would not be liable for any losses on their newly opened account. On this occasion Moye also failed to inform Findlays he, and not the investor, was operating the account.
