Former directors of Avestra Asset Management have been banned from providing financial services for 10 years.
Paul Rowles and Clayton Dempsey were found by the Federal Court to have engaged in multiple contraventions of the Corporations Act. These included related party transactions being undertaken without member approval, failing to notify members of material changes to investment risk and failing to manage conflicts of interest.
Further, Rowles and Dempsey used Avestra funds to acquire shareholdings in a related entity and invest in a wholesale fund which made loans to related parties.
The Court said: "Dempsey's and Rowles's omissions ... were not merely procedural or technical contraventions. They were shortcomings that created or reflected a significantly deficient corporate culture, which enabled Avestra to act with a systematic and serious disregard of its fiduciary and regulatory obligations."
ASIC commissioner John Price added: "The findings of the Federal Court in this matter make very clear that responsible entities are required to act in the interests of members. ASIC will ensure that responsible entities and their directors who fail in these duties are held to account."
ASIC originally sought to wind up Avestra as the responsible entity of around $18 million in managed investment schemes in late 2015. The regulator identified multiple contraventions of duty pertaining to the management of said schemes.
More recently, an ASIC investigation has led to the winding up of another investment manager: Courtenay House Capital Trading Group.
The Supreme Court of NSW has made consent orders and appointed Grant Thornton to liquidate two Courtenay House companies. These orders follow interim orders made on May 1 to prevent Courtenay House from carrying on a financial services business and preventing Courtenay House director Tony Iervasi from leaving the country.
According to ASIC, the amount of investor funds held up in accounts associated with Courtenay House "could be as much as $25 million."