Linchpin Capital and Endeavour Securities could have their assets placed into receivership in light of a judgement handed down by the Federal Court following proceedings brought against it by ASIC.
A sworn affidavit from the ASIC investigator seen by ifa showed that capital from these two funds was used primarily to finance the growth of businesses associated with Linchpin which may have contravened the Corporations Act.
Yesterday, Judge Derrington of the Federal Court accepted ASIC’s prima facie case that the business had breached the Corporations Act and that receivers “ought to be appointed” to the property of Linchpin Capital.
“Linchpin has engaged in serious breaches of s 911A and 911B by issuing interests in a managed investment scheme without authorisation. It did not hold an AFSL or any relevant authorisation under one,” Judge Derrington said.
“Such a contravention has been admitted in part; however, it appears Linchpin has been committing this breach since the establishment of the fund as at no time whilst it was issuing interests did it hold authorisation to do so.”
Judge Derrington added that the contraventions are “serious” and that “the underlying nature of the transactions identified by ASIC are very concerning”.
“They involve the making of loans beyond of the scope of those identified in the Information Memorandum in terms of the identity of the entities to whom loans might be made and the terms on which they should be provided,” Judge Derrington said.
“On the material it is likely the loans in question were made in breach of the trust on which the funds were held. It is also likely they were made in breach of the fiduciary duties owed to the members. These apparent contraventions are exacerbated by the fact they appear to have conferred advantages on Linchpin and its subsidiaries.”
Responding to Judge Derrington’s ruling, Linchpin Capital group managing director Peter Daly said these findings were “based on preliminary evidence” and are yet to be fully tested in court, and added that they do not affect its subsidiary dealer groups Beacon Group and Libertas Financial Planning.
“Linchpin Capital is independently audited on an annual basis and there have been no adverse findings from these audits on such matters,” Mr Daly said.
“We will continue to fully cooperate with these proceedings and look forward to this matter being resolved in a timely manner.”
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