Australian Federal Court has ordered four current and former directors of Endeavour Securities (Australia) Ltd (in liquidation) and Linchpin Capital Group Ltd (in liquidation) to pay $390,000 in penalties.
The Federal Court had previously found Endeavour directors Ian Williams, Paul Raftery, Paul Nielsen and Peter Daly (who was found to have acted as an officer of Endeavour) breached their duties as officers of a responsible entity of a registered managed investment scheme and did not act in the best interests of members.
Mr Nielson, Mr Williams and Mr Rafterty did not contest ASIC’s case at trial and agreed to ASIC’s penalty submissions.
Mr Nielson and Mr Williams will each pay a $100,000 penalty and be banned from managing corporations for four years.
Mr Raftery will pay a $40,000 penalty and be banned from managing a corporation for three years.
Mr Daly, who contested ASIC’s case, will pay a $150,000 penalty and be banned from managing corporations for five years.
The Court previously found that between 2015 and 2018, Mr Nielsen, Mr Raftery and Mr Williams, together with Mr Daly:
- did not take all reasonable steps to ensure that Endeavour complied with its compliance plan, obtain member approval for related party loans and issue 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 Court found Mr Daly and Mr Raftery improperly used their positions by receiving unsecured loans from the unregistered Investport Income Opportunity Fund for their personal use. Mr Daly received loans totalling $130,000 and Mr Raftery took a $40,000 loan.
Mr Nielsen, Mr Raftery and Mr Williams agreed to each pay $175,000 towards ASIC’s costs. Mr Daly has also been ordered to pay $175,000 in addition to a further proportion of ASIC’s costs associated with the contested hearings.
