AAT upholds ASIC’s ban for former Provident Capital director

The Australian Securities and Investment Commission (ASIC’s) banning and disqualification from 2015 of former Provident Capital director, Michael Roger O’Sullivan, has been upheld by the Administrative Appeals Tribunal (AAT).

This would mean that O’Sullivan, of Mosman, Sydney, would be banned from providing financial services for seven years and disqualified from managing corporations.

However, the AAT, which handed down its decision on 27 January, 2022, reduced the period of O’Sullivan’s disqualification from managing corporations from five years to two years and nine months, which will be in place until 20 September, 2024.

At the same time, the seven-year ban on him providing financial services would be in place until 16 February, 2022.

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When he was fined in 2015, ASIC found he had failed fulfil his duties as a director and broke financial services laws as well as failing to carry out due care and diligence in the overseeing and recording of the largest loan made by Provident Capital through its fixed term investment portfolio.

In reviewing ASIC’s findings this year regarding O’Sullivan on remittal of the hearing by the Federal Court, the Tribunal found O’Sullivan:

• failed to exercise due care and diligence in relation to the management of the largest loan (the Burleigh Views Loan) made by Provident Capital Limited (PCL), by deciding to accrue interest on that loan as earned and recoverable income rather than characterising that loan as being in arrears;
• made inadequate disclosures or misleading statements in a prospectus and information booklets regarding debentures issued by PCL;
• made inadequate disclosures or misleading statements regarding the Burleigh Views Loan in reports to the debenture trustee, Australian Executor Trustees Limited (AETL);
• was involved in PCL making inadequate disclosures or misleading statements to AETL about the status of the Burleigh View Loan, the status of the development approval, the valuation information about the property, and the risk of a debt shortfall on any realisation of the property;
• failed to exercise due care and diligence and used his position improperly to gain advantages for himself in securing the release of a personal guarantee he had provided for a loan from PCL to a related company, Cashflow Finance Solution, of which he was a director.