Banned licensee under fire over $114m of investments in Shield

The Australian Securities and Investments Commission (ASIC) has sought leave to commence proceedings that allege MWL operated a business model, involving its former director Nicholas Maikousis and lead generator Imperial Capital Group Australia, that provided inappropriate financial advice to clients to invest their superannuation into the Shield.

The regulator alleged there were “serious failings in relation to Imperial’s referral of clients to MWL and the financial advice given by MWL advisers”.

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Also included in the allegations are that:

• between May 2022 and February 2024, nine MWL representatives advised at least 556 clients to make initial investments of about $114 million of their superannuation into Shield;
• MWL failed to take reasonable steps to ensure its representatives acted in the best interests of its clients and provided appropriate advice in respect of recommendations that clients roll over their superannuation to invest into Shield as the pre-selected investment option;
• MWL failed to ensure its financial services were provided efficiently, honestly and fairly and failed to have in place adequate arrangements to manage conflicts of interest;
• Imperial, acting as a lead generator, made misleading representations to prospective clients about the standard, quality and benefits of MWL’s financial services and was involved in MWL’s alleged contravention of its obligation to provide financial services efficiently, honestly and fairly;
• MWL’s director, Nicholas Maikousis, was involved in MWL’s alleged contraventions of its general licensee obligations and its obligation to take reasonable steps to ensure its authorised representatives complied with their best interests and related duties;
• MWL received advice fees charged to clients for preparing Statements of Advice recommending investment in Shield;
• Imperial received (through a related entity) approximately $12.8 million in payments from entities associated with Shield for client referrals and the promotion of Shield.

ASIC deputy chair Sarah Court said the superannuation of many Australians was put at risk by the conduct proposed to be alleged in this proceeding.

“ASIC will seek to allege that MWL and Imperial were involved in a project which resulted in the superannuation of hundreds of Australians being invested into a high-risk scheme,” Court said.

According to the regulator, the “project” involved Imperial referring prospective clients to MWL for what the lead generator represented would be tailored financial advice, however ASIC said this instead saw MWL put clients into a “pre-selected investment”, namely Shield.

“Instead of the tailored financial advice that was promised, we will seek to allege MWL provided pre-determined advice that was not in clients’ best interests,” the deputy chair added.

“Despite Shield having no proven track record, we will seek to allege clients were advised to invest most or almost all of their retirement savings into the fund, irrespective of their individual circumstances.”

ASIC noted that, because MWL is in administration, ASIC’s application to make these allegations is subject to the Court’s approval or the consent of the administrators.

If allowed to proceed, ASIC said it will seek declarations and civil penalties against all defendants, and orders disqualifying Maikousis from managing corporations.

The announcements follow ASIC cancelling the Australian Financial Services licence of MWL Financial Services and banning Maikousis for 10 years over conduct in relation to Shield.

ASIC also banned the firm’s responsible manager and compliance manager, Robert John Tohill, from providing any financial services for five years.

“Mr Tohill commenced as compliance manager at MWL in December 2016 and was appointed as one of MWL’s responsible managers in December 2021,” ASIC said in a statement.

“Whilst at MWL, certain financial advisers provided personal financial product advice to consumers who invested in the Shield Master Fund.”

In cancelling MWL’s licence, ASIC required MWL to remain a member of AFCA until 25 August 2026.

ASIC also banned four MWL Financial Services advisers in July, beginning with Isaac Jacob McQueen and Matthew Simon Bradley for a period of four and eight years, respectively.

Later that month, ASIC announced it had banned MWL advisers Rocco D’Amelio and Robert Crossing from providing financial services for a period of seven and six years, respectively.