The Federal Court of Australia has ordered four current and former directors of Endeavor Securities (Australia) Ltd (in liquidation) and Linchpin Capital Group Ltd (in liquidation) to pay $390,000 in penalties.
The Federal Court had previously found that Endeavor directors Ian Williams, Paul Raftery, Paul Nielsen and Peter Daly (who was found to have acted as an officer of Endeavor) breached their duties as officers of a responsible entity of a registered managed investment scheme and did not act in the interest of the members.
Mr Nielson, Mr Williams and Mr Rafterty did not challenge ASIC’s case at trial and agreed with ASIC’s submission of penalties.
Mr Nielson and Mr Williams will each pay a $100,000 fine and will be banned from managing companies for four years.
Mr Raftery will pay a $40,000 fine and be banned from running a company for three years.
Mr Daly, who contested ASIC’s case, will pay a $150,000 fine and be banned from managing companies for five years.
The Court previously found that between 2015 and 2018, Mr Nielsen, Mr Raftery and Mr Williams, together with Mr Daly:
- failed to take all reasonable steps to ensure that Endeavor complied with its compliance plan, obtained member approval for related party loans and issued Product Disclosure Statements that complied with the law.
- failed to exercise care and diligence;
- did not act in the best interests of members of the Investport Income Opportunity Fund.
The Tribunal found that Mr Daly and Mr Raftery misused their positions by taking unsecured loans from the unregistered Investport Income Opportunity Fund for their personal use. Mr Daly received loans totaling $130,000 and Mr Raftery received a loan of $40,000.
Mr Nielsen, Mr Raftery and Mr Williams agreed to pay $175,000 towards ASIC’s costs. Mr Daly has also been ordered to pay an additional $175,000 in an additional percentage of ASIC’s costs relating to the disputed hearings.