31 May 2019

19-121MR ASIC updates information for businesses on ICOs and crypto-assets

ASIC has released new information to help businesses involved with initial coin offerings (ICOs) and crypto-assets to consider their legal obligations and satisfy themselves they are operating lawfully.

ASIC has updated Information Sheet 225 Initial coin offerings and crypto-assets (INFO 225) based on our recent experiences with ICOs and crypto-assets, which indicate that ICOs and crypto-assets will often be financial products or involve financial products that are regulated under the Corporations Act.

INFO 225 provides information on how the Corporations Act may apply to businesses that are considering raising funds through an ICO and to businesses involved with crypto-assets.

01 June 2019

19-124MR Federal Court finds against Vocation Limited (In Liquidation) and three officers

The Federal Court of Australia has today delivered judgment in ASIC’s civil penalty proceedings against Vocation Ltd (In Liquidation) and its officers, Mark Hutchinson (former CEO), John Dawkins (former Chairman), and Manvinder Gréwal (former CFO).

The proceedings relate to various statements made to the Australian Securities Exchange (ASX) and in documents relating to a fully underwritten placement to institutional and sophisticated investors in September 2014 and a review undertaken by the Victorian Department of Education and Early Childhood Development (DEECD) into two of Vocation's main registered training organisations (RTOs).

The Court found Vocation Ltd contravened:
•section 1041H(1) of the Corporations Act by making misleading and deceptive statements to the ASX and UBS AG Australia in a 25 August ASX announcement and in a due diligence questionnaire (DDQ) the latter formed the basis for a placement in September 2014 which raised approximately $74m from investors (the September 2014 Placement), and
•its continuous disclosure obligations under section 674(2) by not disclosing to the market the actions taken by the former DEECD in July and August 2014 when it suspended all payments to Vocation.

Further the Court found that
•Mr Hutchinson and Mr Dawkins contravened section 180 of the Act by causing or permitting Vocation’s contravention of section 674(2) of the Act.
•Mr Hutchinson contravened section 180 of the Act by causing or permitting Vocation’s contravention of section 1041H in relation to the 25 August Announcement and the DDQ.
•Mr Gréwal contravened section 180 of the Act by causing or permitting Vocation’s contravention of section 1041H in relation to the DDQ.

The matter has been stood over to 6 June 2019 for a case management hearing to appoint a date for hearing of all remaining questions, including those arising under sections 1317S and 1318 of the Act (relief from penalty); the form of any declaratory relief; all questions of penalty and all questions of costs.

05 June 2019

19-126MR ASIC charges David Anderson with fraud on Octaviar subsidiary company

Former Chief Financial Officer of Octaviar Limited, Mr David Mark Anderson, of the Gold Coast, Queensland, appeared in Southport Magistrates Court charged with twenty-six counts of fraud under the Criminal Code (Queensland).

ASIC alleges that between 18 June 2012 and 21 September 2015, Mr Anderson, while a director of Octaviar Investment Holdings No 3 Pty Ltd (OIH3), dishonestly applied $4,611,571.86 of OIH3 money for his own use.

At the time of the alleged conduct, Mr Anderson was the sole director of OIH3.

The charges were brought against Mr Anderson following an ASIC investigation into his conduct as the director of OIH3 and other companies in the Octaviar Group.

Mr Anderson was released on bail on condition and the matter adjourned to 2 September 2019 before the Southport Magistrates court for further mention.

The Commonwealth Director of Public Prosecutions is prosecuting the matter.

06 June 2019

19-131MR NSW company director convicted after engaging in phoenix activity

Ms Soutsakhorn Chanthabouly (known as Nicole Khammenathy) of Carnes Hill, NSW has been convicted and sentenced after pleading guilty to charges related to illegal phoenix activity.

Ms Chanthabouly was charged with one count of breaching her director duties and another count of destroying company records, following an investigation by ASIC. She was sentenced to a one-year, $500 good behavior bond and ordered to pay $22,000.00 in reparation.

Ms Chanthabouly, a shadow director of MK Asbestos Removal Pty Ltd ACN 142 918 590 (the Company) operated a business of asbestos removal services in New South Wales.

12 June 2019

19-133MR Federal Court finds Whitebox Trading Pty Ltd and its sole director did not engage in market manipulation

The Federal Court of Australia found, on 7 June 2019, that Whitebox Trading Pty Ltd and its sole director and principal, Johannes Boshoff, did not engage in market manipulation in contravention of section 1041A, and contraventions of 1041B, of the Corporations Act in connection with orders they placed on ASX Limited for securities comprised in the S&P ASX 200 Index (Index Securities), on 18 October 2012, as well as on four earlier dates in 2012. Accordingly, the Court also found that Mr Boshoff did not fail in the discharge of his duties as a director of Whitebox.

ASIC is considering the judgment.

Background

On 23 December 2013, ASIC accepted an enforceable undertaking (EU) from NAB in relation to its responsibility for the alleged market misconduct of Whitebox's trading personnel. Read about the EU and further details about the 18 October 2012 orders in 13-365MR.

13 June 2019

ASIC responds to investor concerns about My Group Fintech Co Pty Ltd

ASIC has received enquiries from overseas-based investors about an entity named My Group Fintech Co Pty Ltd (MGF). There appears to be an Australian registered company, as well as a Saint Vincent and The Grenadines-based company with the same name. These entities may be related. Reports made to ASIC indicated that clients who invested through another overseas-based entity Managed In Assets (MIA), recently discovered zero balances in their foreign exchange trading investment accounts, held with MGF.

Background

My Group Fintech Co Pty Ltd with ACN 615 855 840 is an Australian financial services licensee headquartered in Sydney. This company holds Australian Financial Services Licence (AFSL) 493603.

My Group Fintech Co Pty Ltd with registration number 24375 IBC 2017, appears to be incorporated in Saint Vincent and The Grenadines

18 June 2019

ASIC investigation into Mr Chris Marco

On 1 November 2018, the Federal Court of Australia made asset preservation orders against Chris Marco, trading as Coastline Group, and a related entity, AMS Holdings (WA) Pty Ltd as part of an ongoing ASIC investigation. A copy of the orders can be found here.

The effect of these Orders is to:
•secure property (including cash in bank accounts, real estate and vehicles), while ASIC conducts its investigation; and
•preserve those assets, and prevent unauthorised disposal of those assets, which might in due course, be required to pay debts, compensation or damages to any persons who may have suffered loss as a result of the conduct that ASIC is investigating.

ASIC is aware of a number of investors who have investments with Mr Marco and his associated entities.

ASIC has to date approached a number of investors to seek information from them for the purposes of its investigation.

Further information can be found in:
•ASIC’s Media Release 18-354MR which can be found here or at www.asic.gov.au. This media release relates to the court proceedings commenced by ASIC on 1 November 2018 and is updated from time to time with editor’s notes;
•The Federal Court website at www.fedcourt.gov.au which contains information about any orders made and a list of documents filed in the court proceedings, including affidavits filed by ASIC in support of its proceedings. To find this information:
◦Select [Find a Case];
◦Select [Enter];
◦Type in “WAD481/2018” in [Search by File Number];
◦Click on the red coloured and underlined words, “WAD481/2018” that is underneath the heading, “File No”;
◦Click on the cross next to the word, “CORPORATIONS” to expand the list;
◦Click on the cross next to the word, “COURT EVENTS AND ORDERS” to see a list of the Orders made by the Court;
◦Click on the cross next to the word, “DOCUMENTS FILED” to see a list of the documents that have been filed in these proceedings.

Investors wanting information about the ongoing court proceedings in relation to Mr Marco and his associated entities can complete a form and apply for access to some of the court documents. Information about how to apply for access is at https://www.fedcourt.gov.au/services/access-to-files-and-transcripts/court-documents/non-party-access.

Investors can also contact the ASIC investigation team by email at CMarcoinvestorliaison@asic.gov.au.

As the investigation is ongoing, ASIC is limited in the public commentary it can make about the matter at this time.