ASIC’s partial court win on Mayfair 101

The Australian Securities and Investments Commission (ASIC) last week secured a partial win in its legal action against Mayfair 101 Group director, James Mawhinney.

The regulator announced that the Federal Court had found that Mawhinney was associated with or involved in contraventions of the law by companies in the Mayfair 101 Group, following proceedings brought by ASIC.

The Court determined that Mayfair 101 Group companies contravened the law when they made multiple false or misleading representations in the marketing of the M+ Fixed Income Notes, M Core Fixed Income Notes and Australian Property Bonds across various periods between 3 July 2019 and 5 May 2020.

ASIC said the Court also determined that Mayfair 101 Group companies engaged in misleading or deceptive conduct from 11 March 2020 to just prior to 2 April 2020 by failing to disclose in marketing material that investor redemptions had been suspended.

“Finally, the Court found that Mayfair 101 Group company IPO Capital carried on a financial services business from 2016 to December 2017 without an Australian Financial Services Licence,” it said.

“The Court found that Mr Mawhinney was associated with or involved in the above contraventions.”

However, the regulator noted that, contrary to ASIC‘s allegation, the Court determined that Mayfair 101 Group companies did not represent that its Core Notes and M+ Notes, were comparable to, and of similar risk profile to bank term deposits.

The Court also found that while Mayfair 101 Group companies made certain representations relating to the use of funds invested in the Core Notes, and the security to be granted to an investor in the Australian Property Bonds, those representations were not misleading or deceptive, as ASIC had alleged. The Court also rejected the case advanced by ASIC that family trusts associated with Mr Mawhinney received amounts traceable to funds invested in the Core Notes.

ASIC said it is seeking injunctions restraining Mr Mawhinney from advertising and fundraising through financial products, and from removing from Australia any assets acquired with funds received in connection with a financial product.

Mawhinney requested an opportunity to make further submissions on relief following Justice Button’s decision.

The parties are to make any further submissions on relief within 21 days.