Dixon Advisory director to face civil penalty proceedings
ASIC has commenced civil penalty proceedings in the Federal Court against a director of Dixon Advisory and Superannuation Services (DASS) for alleged breaches of directors’ duties.
Paul Ryan is alleged to have breached his duties as a director by his involvement in decisions ASIC alleges were to the advantage of Dixon Advisory’s holding company, E&P Operations Pty Ltd, and by failing to properly consider the interests of Dixon Advisory’s creditors. Ryan was also a director of E&P Operations.
ASIC alleges that Ryan was involved in:
- Amending the constitution of Dixon Advisory on 22 December 2021 to expressly authorise its directors to act in the interest of E&P Operations; and
- Executing a deed of acknowledgement of debt (Deed) on 24 December 2021 between Dixon Advisory and E&P Operations to the advantage of E&P Operations and to the detriment of Dixon Advisory.
ASIC further alleges that at the time the Deed was entered:
- E&P Operations owed Dixon Advisory over $19 million;
- Dixon Advisory was approaching insolvency and therefore its directors were obligated to consider the interests of creditors;
- The Deed imposed conditions which adversely affected Dixon Advisory’s right to recover this $19 million debt.
ASIC deputy chair, Sarah Court, said: “Directors have responsibilities under the law to act in the best interests of their company, and this includes considering the interests of creditors when the company is facing insolvency.
“The creditors included thousands of financial advice clients who had invested in the US Masters Residential Property Fund and financial products operated by entities related to Dixon Advisory. These creditors suffered significant losses.”
In the period from 2020, Dixon Advisory faced claims arising from the provision of financial advice to clients who were advised to invest in the US Masters Residential Property Fund (URF) and URF-related products, which were issued and operated by related companies to Dixon Advisory. These included:
- A proceeding issued by ASIC in the Federal Court which resulted in orders for Dixon Advisory to pay a $7.2 million penalty and $1 million towards ASIC’s costs.
- Complaints made to the Australian Financial Complaints Authority; and
- Three court proceedings in the Federal Court, including two class action proceedings.
A statement from E&P Financial Group to the ASX said: "The allegations relate to the conduct of Mr Ryan in his capacity as a director of Dixon Advisory and Superannuation Services in the weeks leading up to the appointment of voluntary administrators to DASS in January 2022. Ryan was first appointed as a director of DASS in March 2021.
"E&P has been informed that Mr Ryan denies any wrongdoing and intends to vigorously defend the proceedings. E&P considers that Ryan has always acted with integrity in his role as a director of DASS, including in the weeks leading up to the appointment of the voluntary administrators of DASS. Mr Ryan will continue in his current roles at E&P."
AUTHOR
Laura Dew
Recommended for you
Global retirement administration business MUFG Pension and Market Services has fully acquired Moneysoft, an Australian digital solutions provider for financial advisers.
The Financial Advice Association Australia has explored how financial advisers can personalise their service offerings for Millennials, Generation X and Baby Boomers.
More than half of the past 13 weeks of Q3 enjoyed a rise in financial adviser numbers, according to Wealth Data figures, an improvement on the same time a year ago.
The fallout from Dixon Advisory and effect on the professional indemnity insurance market could have been far worse, according to Numerisk’s Richard Silberman, if the product collapse hadn’t been isolated to one company.
Hello and thanks for covering this item. I am an ex DASS client and current URF investor. Also party in Shine Lawyers class action. Very interested in this latest development. The whole debacle seemed to go very quiet but maybe there’s still hope for some compensation. Thanks