ASIC Takes Court Action Over van Eyk Failure

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The Australian Securities and Investments Commission (ASIC) has begun court proceedings against the fund manager responsible for managed funds offered via van Eyk Research, which closed in late 2014 after a failed offshore investment.

ASIC commenced the proceedings in the Supreme Court of New South Wales against Macquarie Investment Management Ltd (MIML) over five contraventions of the Corporations Act.

MIML was the responsible entity of the van Eyk Blueprint International Shares Fund (VBI Fund) offered through the research house (now in liquidation), which acted as investment manager and remains the subject on an ongoing ASIC investigation.

In 2012 the VBI Fund invested $30 million into another fund – the Artefact Partners Global Opportunities Fund – based in the Cayman Islands with this investment the center of ASIC’s proceedings and to which MIML has admitted to five contraventions of the Corporations Act.

As such, MIML agreed that it failed to comply with its duties as a responsible entity by:

  • failing to adequately address risks associated with the decision for the VBI Fund to make three investments into Artefact between 6 July to 30 October 2012;
  • allowing members to redeem or withdraw units from the VBI Fund when it was illiquid in contravention of the Corporations Act and the scheme’s constitution between 15 June 2013 to 9 September 2013; and
  • failing to make adequate and timely enquiries in relation to van Eyk’s monitoring of the VBI Fund’s investment in Artefact between 18 February 2013 and 21 July 2014 (including not making adequate and timely enquiries as to why a full redemption from Artefact had not been paid between 1 January 2014 to 21 July 2014).

ASIC and MIML will return to court on 23 August which will hear submissions on appropriate penalties which will be determined by the Court.

 

ASIC Cancels Financial Services Business Licence

The Australian Securities and Investments Commission (ASIC) has cancelled the Australian financial services licence of Queensland financial services group, nine months after the regulator imposed conditions on the group’s licence.

ASIC cancelled the licence of Advamode Financial Pty Ltd, following a request by the group to do so after it was placed into liquidation at the start of May.

While the group’s licence was cancelled on 20 June, ASIC stated it remains in effect for the purposes of External Dispute Resolution Scheme membership and client compensation purposes, with clients of Advamode still able to lodge complaints about advice received from the group.

Advamode was already operating under additional licence conditions since 2 September 2015 after ASIC surveillance identified concerns regarding its ability to effectively carry out its supervisory requirements.
At the time of imposing the extra conditions ASIC stated it was concerned about Advamode’s ability to honestly and fairly provide financial services and whether it could demonstrate it had adequate financial resources to provide those services.

ASIC was also concerned about Advamode’s ability to demonstrate that adequate research had been undertaken in to financial products and if adequate arrangements for the management of conflicts of interest were in place.