Property spruiker restrained from marketing ‘no money down’ investment opportunity
A property developer has been ordered to refrain from promoting a "no money down" investment proposal, after the Australian Securities and Investments Commission (ASIC) flagged concerns.
The regulator had sought orders restraining Macro Realty Developments Pty Ltd from promoting the investment opportunity to investors, claiming that the company had engaged in misleading or deceptive conduct, including misrepresentations, in contravention of s 1041H of the Act and s 12DA of the ASIC Act.
The firm, alongside Property Tuition Pty Ltd, and Education Holdings Pty Ltd — who were together known as 21st Century prior to liquidators being appointed to both businesses in October 2015 — offered investors the chance to invest in property, with Macro agreeing to pay the investor between $100 and $400 per week, depending on whether the investor was able to obtain institutional finance and the number of properties owned by the company.
"The Investment Proposal required an investor to become a director of a company in respect of which Macro: (a) was the sole decision maker for all activities of the company; (b) retained control of the company; and (c) remained the sole decision maker for all business associated with the company in circumstances where the investor agreed to do all things that Macro required to run the business of the company ‘as [Macro saw] fit'," the Federal Court of Australia documents reported.
"The implied representation that the investment is essentially risk free is false or misleading and likely to lead investors into error.
"The investment risk includes a risk that Macro may not be in a position to ‘buy back' the properties from all investors at the price for which the properties were transacted some three years earlier."
The court ordered that Macro be restrained whether by itself, its officers, servants, agents, or otherwise howsoever from:
- promoting and marketing the Investment Proposal;
- entering into any arrangement or agreement in relation to the Investment Proposal;
- doing any act in furtherance of or in connection with the Investment Proposal; and
- receiving, soliciting or disposing of any funds in connection with the Investment Proposal.
The First Defendant pay the Plaintiff's costs of this proceeding including all reserved costs.
AUTHOR
Nicholas O'Donoghue
Recommended for you
ASIC believes advice licensees are the “first line of defence” when it comes to future product failures and is urging them to monitor their approved product lists.
Assistant Treasurer, Daniel Mulino, is keen to progress the second tranche of DBFO reforms, acknowledging it is hard for advisers to get the full picture of the legislation without both parts.
A professional year supervisor has been banned for five years after advice provided by his provisional relevant provider was deemed to be inappropriate, the first time this is believed to have occurred.
Pinnacle Investment Management has made a strategic investment in private capital investment firm FinCap to support a new managed accounts platform.
