Peter Daly and other directors hit with Federal Court penalties

Four current and former directors of the liquidated Endeavour Securities and Linchpin Capital Group have been ordered to pay $390,000 in penalties.

The Australian Securities and Investments Commission (ASIC) said that the Federal Court had previously found Endeavour directors, Ian Williams, Paul Raftery, Paul Neilsen and Peter Daly (who was found to have acted as an officer of Endeavour) had breached their duties as officers of a responsible entity of a registered managed investment scheme and did not act in the best interests of members.

The outcome sees Peter Daly, who contested ASIC’s case, banned from managing corporations for five years.

Commenting on the outcome, ASIC Deputy Chair Sarah Court said, “ASIC took this case because we believed reasonable steps were not being taken by the directors to comply with their own compliance plan and obtain member approval for loans.

“Today’s penalties are significant and should act as a reminder to directors of responsible entities that operate managed investment schemes that they must act in the best interests of members.”

Nielson, Williams and Rafterty did not contest ASIC’s case at trial and agreed to ASIC’s penalty submissions.  Nielson and Williams will each pay a $100,000 penalty and be banned from managing corporations for four years.

Raftery will pay a $40,000 penalty and be banned from managing a corporation for three years.

Daly, who contested ASIC’s case, will pay a $150,000 penalty and be banned from managing corporations for five years.

The ASIC announcement noted that, in reaching her penalty decision with respect to Daly, Justice Cheeseman said, “Mr Daly has only superficially accepted responsibility for his actions”.

“Her Honour noted that ‘The lack of remorse or contrition demonstrated by Mr Daly […] is relevant in that it suggests a higher penalty is warranted for the penalty to achieve the objective of specific deterrence.’

The Court previously found that between 2015 and 2018, Nielsen, Raftery and Williams, together with Daly:

• did not take all reasonable steps to ensure that Endeavour complied with its compliance plan, obtain member approval for related party loans and issue Product Disclosure Statements that complied with the law;
• failed to exercise care and diligence;
• did not act in the best interests of members of the Investport Income Opportunity Fund.

The Court found Daly and Raftery improperly used their positions by receiving unsecured loans from the unregistered Investport Income Opportunity Fund for their personal use. Daly received loans totalling $130,000 and Raftery took a $40,000 loan.

Nielsen, Raftery and Williams agreed to each pay $175,000 towards ASIC’s costs. Daly has also been ordered to pay $175,000 in addition to a further proportion of ASIC’s costs associated with the contested hearings.