ASIC investigates potential $138m scam

ASIC has confirmed it is actively investigating a potential scam that has seen at least $138 million of Australian investor funds lost.

ASIC said the investigation is around whether there were oversight, due diligence and compliance failures linked to MGF Capital's corporate authorised representatives.

"ASIC is concerned many investors may have been exposed to significant financial losses and is examining whether appropriate governance, compliance and oversight arrangements were in place," an ASIC spokesperson said.

"Misconduct involving a high risk of significant consumer harm and governance and directors' duties failures are enduring ASIC enforcement priorities.

"ASIC will not hesitate to take appropriate enforcement action where we identify serious misconduct within our jurisdiction."

ASIC's investigation concerns Trade Prime, formerly MGF Capital, and its sole director Matthew Starkey.

Starkey worked as a Goldman Sachs trader for around five years. Starkey also previously worked as chief operating officer for crypto exchange and brokerage Mine Digital.

Starkey and Mine Digital made headlines in 2022 after an SMSF trying to recover $1.6 million lost to international scammers had been told a laptop and phone, belonging to Starkey, had been disposed of.

The devices were requested in a legal action launched by an SMSF against ACCE, the holding company of Mine Digital.

ASIC now confirms it has received complaints from investors indicating at least $138 million has been invested into financial services products and platforms that investors believed were being offered by corporate authorised representatives of MGF Capital and those funds are now unable to be withdrawn.

Financial Standard understands MGF Capital holds an AFSL but was not required to hold membership with the Australian Financial Complaints Authority (AFCA) as its licence relates to the provision of products to wholesale clients only.

Part of ASIC's investigation concerns whether Australian-based corporate authorised representative entities provided retail services when MGF Capital's licence only allowed the provision of financial services to wholesale clients.

It is now believed MGF Capital cancelled its AFCA membership.