Five ASIC highlights: Property breaches, collapsed development groups, falsified mortgage documents

ASIC’s six-month enforcement report, the fifth they have released, details outcomes between 1 July 2013 and 31 December 2013, and provides the highlights.

With 340 enforcement outcomes across the board, including criminal, civil and administrative, negotiated outcomes and enforceable undertakings (EU), there’s much to look at.

Of this total, 112 outcomes were in the market integrity, corporate governance and financial services area. Another 228 were in the small business area.

EUs were secured with NAB, UBS, Wealthsure and Commsec.

ASIC’s current focus areas include:

Cracking down on misleading advertising of products and services

Market misconduct (including insider trading)

The responsibility of gatekeepers

Other focus areas, as outlined by ASIC Commissioner, Greg Tanzer, include loan fraud, false accounting, takeovers and shareholder disclosure.

“ASIC’s crackdown on brokers submitting fraudulent loan applications and similar behaviour has seen several individuals criminally charged or banned. We currently have more than 20 investigations underway involving falsification of loan documents and loan applications,” he said.

Report 383 included a number of ‘highlighted’ results in a range of areas.

These are the five property-related highlights of the six month period:

  1. The Federal Court finding five former directors of Australian Property Custodian Holdings Ltd as liable for breaching their duties as officers of the company. The company was the responsible entity of the Prime Retirement and Aged Care Property Trust (Prime Trust), a management investment scheme with retirement villages in New South Wales, Queensland and Victoria. Collapsing in 2010, the company owed investors $550 million.
  2. Former director of Dollarforce Financial Services Pty Ltd, Clestus Weerappah, was jailed for four years due to his role in the collapse of the property development group. Dollarforce, which collapsed in 2009 with a $24 million deficiency, saw investors lose more than $8 million. Weerappah pleaded guilty to five charges related to raising more than $4 million from investors. He was ordered to repay a total of $3.7 million to investors.
  3. Interim stop orders were placed on the product disclosure statements and associated advertising for Trilogy Monthly Income Fund and Trilogy Melbourne Office Syndicate – Cheltenham. The concerns related to the use of headline rates of return, comparisons between other products without disclosing the differences between them, failure to disclose against the benchmark or to apply disclosure principles and the use of ratings statements without providing adequate details.
  4. The AFS licence of Australian Public Trustees Limited was cancelled after they breached a number of financial reporting and other obligations. It operated managed investment schemes, both of which invested in direct real property. They failed to lodge audited financial reports on time, as well as to comply with conditions of the license.
  5. A former mortgage broker, Hee Seng Lee of Dural, New South Wales, pleaded guilty to six charges of making false statements and providing false documents after falsifying information provided to the banks to secure $7.5 million of home loans. The loans ranged from $160,000 to $1.5 million.

    Jennifer Duke

    Jennifer Duke

    Jennifer Duke was a property writer at Property Observer

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