ASIC hits Adam Blumenthal, Everblu Capital

The Australian Securities and Investments Commission (ASIC) has hit Adam Blumenthal with civil penalty proceedings in the Federal Court after allegedly breaching his duties as a company director and market rigging.

This comes as the corporate regulator announced it had accepted a court enforceable undertaking from Blumenthal to cease any involvement in financial services for five years and from Everblu, his corporate advisory company, that it will seek to cancel its Australian financial services licence (AFSL) and cease offering financial services to new clients.

An investigation conducted by ASIC found Everblu breached its obligations as a licensee between 18 March and 15 November 2021 by failing to “properly follow procedures and put in place adequate controls relating to the receipt and execution of client orders, the use of its suspense account, the maintenance of records and the management of conflicts of interest”.

ASIC found Blumenthal also:

• “as EverBlu’s director, failed to comply with EverBlu’s conflicts of interest policy and was involved in EverBlu’s breaches of its obligations as an AFS licensee;
• facilitated loans from his private company, Anglo Menda Pty Ltd, to lend funds to certain EverBlu clients, in breach of EverBlu’s personal dealing policy, to trade in ASX-listed Creso Pharma Limited (Creso) shares, a company of which Mr Blumenthal was also a director. This included lending Tyson Scholz, a known market finfluencer and EverBlu client, more than $7 million, and another Everblu client more than $5 million; and
• engaged in market rigging when on 14 occasions (on 10 separate days) he caused or enabled certain client orders to purchase Creso shares, intending to represent to the market that there were more individual bidders for Creso shares than existed to create, or cause the creation of, a false or misleading appearance with respect to the market for Creso shares on the ASX.”

The corporate watchdog also alleges that Blumenthal:

• “breached his duties as a director of EverBlu;
• engaged in market rigging in relation to Creso shares;
• breached his duties as a director of Creso in relation to the engagement of Mr Scholz and another party, whose main trading entity was also an Everblu client, to provide marketing and promotional services for Creso. ASIC alleges that pursuant to these engagements, Creso paid Mr Scholz more than $2 million and the other party more than $1.2 million; and
• breached his duties as Creso’s director by failing to avoid a conflict of interest given his financial relationship with Mr Scholz.

As part of the court enforceable undertaking, Everblu acknowledged it had breached its obligations to “act honestly, efficiently and fairly” and will apply to cancel its AFSL within eight weeks. Blumenthal is not to be involved in financial services for five years and will be required to undertake training prior to re-entering the industry.