ASIC initiates court action against Dixon Advisory director, Paul Ryan
The Australian Securities and Investments Commission (ASIC) has taken another step following the collapse of Dixon Advisory announcing today that has commenced civil penalty proceedings in the Federal Court against Dixon Advisory director, Paul Ryan.
It said the Federal Court proceedings related to breaches of directors’ duties, with ASIC alleging that Ryan breached his duties as a director by his involvement in decisions ASIC alleges were to the advantage of Dixon Advisory’s holding company, E&P Operations Pty Ltd, and by failing to properly consider the interests of Dixon Advisory’s creditors. Mr Ryan was also a director of E&P Operations.
Commenting on the move, ASIC Deputy Chair Sarah Court said: “Directors have responsibilities under the law to act in the best interests of their company, and this includes considering the interests of creditors when the company is facing insolvency.
“The creditors included thousands of financial advice clients who had invested in the US Masters Residential Property Fund and financial products operated by entities related to Dixon Advisory. These creditors suffered significant losses.’
ASIC alleges that Mr Ryan was involved in:
- amending the constitution of Dixon Advisory on 22 December 2021 to expressly authorise its directors to act in the interest of E&P Operations; and
- executing a deed of acknowledgement of debt (Deed) on 24 December 2021 between Dixon Advisory and E&P Operations to the advantage of E&P Operations and to the detriment of Dixon Advisory.
ASIC further alleges that at the time the Deed was entered:
- E&P Operations owed Dixon Advisory over $19 million;
- Dixon Advisory was approaching insolvency and therefore its directors were obligated to consider the interests of creditors;
- the Deed imposed conditions which adversely affected Dixon Advisory’s right to recover this $19 million debt.
‘These proceedings underline our commitment to ensure directors meet their governance obligations, including where they serve on the boards of multiple companies in a corporate group,’ concluded Ms Court.
Wow ASIC you are so quick to the Dixon’s disaster.
How about charges against:
– Dixon’s Responsible Manager
– Dixon’s MIS operators & managers
– Dixon’s Directors who floated the Company knowingly with massive undisclosed MIS problems.
Actually do something properly ASIC, you were warned for 10 years and did nothing until it was collapsed.
This is a good thing, however it is more about insolvency law, rather than financial services law. What I would really like to see is ASIC take action against the executives and directors of the parent company, who were responsible for encouraging/influencing/incentivising the financial advisers in Dixon Advisory to get clients to put money into and leave their money in underperforming in-house products such as the US Masters Residential Property Fund. This is what needs to happen to address where a big slice of the responsibility sits in a vertically integrated context like the scandal that Dixon Advisory is. The financial advisers should not be left to carry the full responsibility for what happened in Dixon Advisory. Given that the latest estimate is that this will cost the CSLR $250m, this needs to be properly investigated.
Good to see but I assume advisers will be funding this via ASIC levy and then if anything is paid out it wont go towards the CSLR? and we know it wont reduce the ASIC levy. Considering Dixon will make up the majority of CSLR cases then the proceeds of this case, if there are any, should be used to fund the CSLR.