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Court rejects Provide Capital's 'illogical' application

The federal court has rejected Provide Capital's "illogical" application to prevent ASIC conducting further investigation into the firm.

Justice Rofe dismissed Provide Capital's application that alleged ASIC did not have the state of mind required to conduct an investigation under the Australian Securities and Investments Commission Act 2001 (ASIC Act).

Justice Rofe found that the firm's argument was "illogical and therefore that Provide Capital's application had no reasonable prospect of success".

As part of the proceeding, Provide Capital issued a notice to ASIC requesting documents relating to its investigation.

Justice Rofe said that while she did not need to decide on the notice due to the dismissal, "if I were required to reach a conclusion, I would have set the notice aside on the basis that it is fairly characterised as "fishing" or "trawling" for documents". She also ordered that Provide Capital pay ASIC's costs.

In March 2022, ASIC commenced an investigation into Provide Capital for alleged false and misleading representations or misleading or deceptive conduct.

Provide Capital said that its business enables individuals, companies, self-managed superannuation funds, and trusts the opportunity to lend to it and earn fixed interest returns. It then uses borrowings from third parties to increase its operational and investment capabilities.

ASIC commenced the formal investigation "under s 13 of the ASIC Act in relation to suspected contraventions of s 911A of the Corporations Act with respect to offering investment opportunities by Provide since 28 September 2020," court documents show.

In late 2022, ASIC began legal proceedings against Provide Capital following its failures to produce several documents as part of its investigation.

On 13 December 2023, Provide Capital made an application to prevent further investigations alleging ASIC did not have reasonable grounds to suspect the contraventions under investigation because it had not prepared an interim report under section 16 of the ASIC Act. The court found that Provide Capital had a history of delay and obfuscation in handing over the documents, resulting in the dismissal of its appeal.

Commenting on the latest verdict, ASIC chair Joe Longo said: "The outcome in this case demonstrates ASIC's commitment to taking action to prevent its investigations being delayed by baseless challenges to its powers."

Read more: ASICProvide CapitalJustice RofeJoe Longo