ASIC obtains orders against Linchpin, Endeavour

The Federal Court of Australia has made interim orders in proceedings brought by the Australian Securities and Investments Commission (ASIC) against Linchpin Capital Group and Endeavour Securities (Australia) Ltd, the regulator said.

This follows the Federal Court deciding earlier this week that Linchpin had engaged in activities related to an unregistered managed investment scheme when it was not authorised to do so.

Linchpin and Endeavour operate two managed investment schemes. Both schemes are called “Investport Income Opportunity Fund”.

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On 7 August 2018, Justice Derrington found that, on the evidence filed to date, Linchpin had engaged in serious breaches of the Corporations Act and that the Court could not have any confidence that Linchpin and its directors would act in the interests of the fund operated by Linchpin.

“The manner in which the (Linchpin) fund has been operated is also a matter of some concern given that the bulk of the funds have been invested in related party loans with no registered security … and the circumstances indicate this is likely to have given rise to breaches of trust and fiduciary duty,” the judge said.

The Court also found that there was a prima facie case that Endeavour had engaged in serious and persistent contraventions of the Corporations Act and breaches of duty towards members of the fund operated by Endeavour.

“It appears that a substantial portion of the assets of the (Endeavour) Fund have been applied by it in contravention of the Act … and the transactions entered into by Endeavour required the approval of the members of the fund and that has neither been sought nor obtained,” the judge said.

The Court also ordered that David Orr and Jason Tracy of Deloitte be appointed as receivers over the assets of Linchpin, and any assets held by Endeavour in its capacity as responsibility entity of the Investport Income Opportunity Fund.

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