ASIC confirmed on Wednesday (22 December) that the penalty relates to misleading advertising by Mayfair Wealth Partners ($10 million) and Online Investments (trading as Mayfair 101 – $4 million), M101 Nominees ($8 million) and M101 Holdings ($8 million) when promoting the M+ and M Core Fixed Income Notes in March this year.
The products were advertised in newspapers, on websites, and through Google search advertising.
The court found that the notes were promoted as comparable to and of similar risk profile to bank term deposits when they were of significantly higher risk and that they carried no risk of default when there, in fact, was a risk that investors could lose some or all of their principal investment.
It comes after the director of the companies, James Mawhinney, was restrained from advertising and raising funds through financial products for 20 years in April.
Justice Anderson found that Mr Mawhinney had shown no remorse “for the loss and harm caused to investors in the Mayfair products”.
“The defendants deliberately mislead investors into investing in the Mayfair products under the belief that they would be of low risk when in fact the Mayfair products were highly speculative and carried very substantial risk,” Justice Anderson said.
ASIC deputy chair Sarah Court added: “This penalty makes clear that firms must do the right thing by their investors, irrespective of whether they are wholesale or retail investors.
“Failing to accurately advertise financial products can result in significant penalties for firms.”
Last month, Mr Mawhinney denied any contempt of court after ASIC filed an application in the Federal Court.
“I deny ASIC’s allegations and intend on vigorously defending these proceedings so our noteholders can be made whole,” Mr Mawhinney said at the time.
Mr Mawhinney added that the Mayfair Group still controlled assets worth around $100 million and that, subject to defending various proceedings, the company “is on track to resume distributions and redemption payments to its noteholders in 2022”.
Though at the same time, if a company is already under financial pressure to be able to pay back investors how is ASIC reaching in with its grubby hands to take whatever it can before anyone else actually going to help consumers? I’m sure ASIC won’t reduce the Adviser levy or what they ask for from government as a result of their $40m windfall either.
For once ASIC doing something good for investors. Next up ASIC how about looking at Industry Super Funds who lable their funds with 80% Growth assets as a Balanced fund. Or the compare the pair advertisements which pick statistics to show ISN with better returns. Of course if you have 5 investment options, 4 of which are growth, you will have better overall returns to the retail funds who are aimed at retirees and people with different levels of risk apetite which means you have half conservative/strable investments and half growth. But obviously Industry Super, along with the big 4 banks are above the law.