ASIC seeks banning orders in SMSF investigation

Earlier this afternoon, ASIC announced it had made submissions to the Federal Court in relation to orders it was seeking in its civil action involving ActiveSuper and others.

ASIC stated it is seeking declarations of contravention and banning orders ranging from permanent to 7.5 years against Craig Gore and other individuals from providing financial services, following their involvement in the misuse of more than $4 million raised from SMSF investors.

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The corporate regulator’s submissions follow Federal Court judge Richard White’s ruling in April 2015 that Mr Gore, several other parties and financial services businesses, including Queensland-based ActiveSuper and Royale Capital contravened sections of the Corporations Act or were knowingly concerned in those contraventions.

ASIC said the investigation of the group of individuals and businesses began in November 2011, and civil proceedings were launched in 2012. The companies raised $4.75 million from more than 200 SMSF investors, and the scheme aimed to raise at least $20 million before ASIC intervened.

ASIC’s investigation looked at the advice given to Australian investors to establish an SMSF and invest money in a share scheme involving offshore entities and investment in real estate.

The judgement confirmed ASIC’s view of the law, ASIC stated, namely that those who promote and make recommendations to investors about establishing an SMSF or using an existing one and recommend, facilitate or arrange for the investors to acquire or dispose of superannuation assets, including interests in deposit and payment accounts, are carrying on a financial services business for which they must have an AFSL.

“We will not tolerate behaviour that puts at risk the interests of SMSF members, including unlicensed conduct and false and misleading activity,” said ASIC commissioner Greg Tanzer.

“The experience of the investors in this matter, who have lost in the order of $4.5 million, should also serve as a timely reminder to SMSF investors to understand the risks associated with do-it-yourself super and their obligations as trustees,” he added.

“Investors need to do their homework, check who they are dealing with and remember SMSFs do not have access to compensation arrangements in the event of theft or fraud. There can also be significant tax penalties for those trustees of SMSFs who get it wrong.”