Sun sets on pyramid plan
At least another three advisers are still to feel the sting of the investment watchdog in the wash up to the failed Wattle Group scheme.
At least another three advisers are still to feel the sting of the investment watchdog in the wash up to the failed Wattle Group scheme.
The Australian Investment and Securities Commission is expected to either ban or charge another three advisers, bringing the number of advisers caught up in the failed scheme to 10. Nearly 3000 investors lost about $165 million in the multi-level scheme similar to a pyramid scheme.
The director of regulatory projects for ASIC’s Queensland regional office, Jan Speirs, says four advisers have been banned, two are appealing banning orders and one has accepted an enforceable undertaking.
“Twelve months of intense investigation have already gone on with a number of advisers picked up as well as one agreeing to an enforceable undertaking,” Speirs says.
The advisers, who at the time were proper authority holders with MLC, Financial Wisdom and Count Financial Group, told ASIC they were promised high returns and commissions.
According to ASIC contract writer Bina Brown, one adviser, who placed $12 million for 420 people into the scheme, was promised a 19.2 per cent trail commission, well above the standard commission of three to five per cent. Another adviser was paid $600,000 as commission from the group.
Eleven people are slated to appear in the courts later this year in relation to the promotion of the Wattle scheme, having been charged with breaches of the Corporations Law.
Speirs also says the amount of funds lost in the scheme could climb but was awaiting the final trustees report in about a month.
“About $165 million is the figure generally used and accepted as official, she says. However Geoffrey Dexter, who operated the scheme, has been declared bankrupt.
“The trustees have been appointed to look into this area.”
The Wattle Group was a multi-level marketing scheme which operated out of Queensland and was voluntary deregistered in October 1998. The scheme promised to pay interest of 50 per cent per annum to the 3000 investors who lent money to Dexter and the Wattle Group.
ASIC uncovered the system after receiving complaints from financial advisers about the validity of the scheme.
AUTHOR
Jason Spits
Recommended for you
ASIC has cancelled the AFSL of an advice firm associated with Shield and First Guardian collapses, and permanently banned its responsible manager.
In the run-up to heavy losses expected at the end of the financial year, June has already reported consecutive weeks of adviser losses.
ASIC has banned a former NSW adviser from providing advice for 10 years for investing at least $14.8 million into a cryptocurrency-based scam.
ASIC has sent warning notices to social media finfluencers who it suspects are providing unlicensed financial advice to Australians as part of a global crackdown by international regulators.
