Lion Advantage loses financial services licence and CEO David Hickie banned by ASIC for two years

ASIC has cancelled the Australian financial services (AFS) licence of investment firm Lion Advantage Limited and banned its chief executive, David Hickie, from providing financial services for two years after undertaking a surveillance of the business.

Hickie provided consulting services to Mark McIvor’s failed mortgage fund operator Equititrust in November 2011 and was appointed a director of Equititrust in January 2012.

He was a director at ASX-listed software group Sofcom from March 2008 to April 2009.

At the time of his appointment Sofcom noted that he had over 39 years'experience in banking, finance and funds management and says tha for a "period of approximately a decade" he was a non-executive director of Societe Generale Australia Limited securitisation conduits, ACE Limited, ACE Funding Limited, AUSTRA Limited and HOMES Limited and has also provided consulting for structured finance to a number of parties locally as well as offshore.

Lion Advantage provided financial product services to retail clients and acted as a responsible entity, operating four registered managed investment schemes that invested in real property.

The firm’s services included issuing, acquiring and disposing of interests in managed investment schemes.

The cancellation of Lion’s AFS license was effective August 10, 2012, and Hickie’s banning was effective from August 14.

ASIC found that Lion Advantage had breached a number of the financial, reporting and other obligations of a financial services licensee in contravention of the Corporations Act.

Among its failures, ASIC found that Lion Advantage repeatedly failed to lodge audited financial reports on time for Lion Advantage and the schemes it operated and did not and did not have adequate professional indemnity (PI) insurance in place.

ASIC was also concerned that Lion Advantage and David Hickie “failed to comply with the obligation to notify ASIC of significant breaches, and did not have adequate compliance measures in place to ensure compliance with financial services laws”.

"Companies have important obligations that are central to ensuring the transparency and accountability of the reporting process and must comply with their reporting requirements to ensure users of financial reports like shareholders and creditors have the information available to them to help them make informed decisions," said ASIC commissioner Greg Tanzer.

"Licensees who fail to maintain adequate PI insurance expose retail clients to the risk that they go uncompensated in circumstances where a licensee has insufficient funds to meet client claims. EDR schemes are equally important as they provide consumers with alternatives to legal proceedings in respect of resolving complaints with their financial service providers.’

In an April 2012 report, David Whyte, the ASIC-appointed receiver of Gold Coast mortgage fund operator Equititrust, noted that David Hickie had been engaged by Equititrust in November 2011.

The Supreme Court of Queensland appointed Whyte to wind up the Equititrust Income Fund (EIF) and Equititrust Priority Class Income Fund (EPCIF) on November 21. The court also appointed Whyte as receiver of the property of EIF and EPCIF.

Whyte says that “David Hickie of Lion Advantage has worked closely with Mark McIvor and Ross Honeyman (director of financial services)” devising an alternative strategy for Equititrust.

McIvor and Honeyman had sought to be reimbursed for the consultancy fee paid to Hickie, but Whyte had refused on the grounds that it was “not properly and reasonably occurred in the winding up of the fund”.

Richard Albarran, Blair Pleash and Glen Oldham of Hall Chadwick as liquidators of Equititrust Ltd on April 20, 2012.

Lion Advantage and David Hickie have the right to appeal to the Administrative Appeals Tribunal for a review of ASIC’s decision.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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