ASIC loses Federal Court case against LM's Peter Drake on Maddison Estate

The Federal Court has found that Peter Charles Drake, Francene Maree Mulder and Eghard van der Hoven did not breach their duties as directors of LM Investment Management Ltd (LMIM).

ASIC had alleged that Drake used his position to gain an advantage for himself and that each of the former directors of LMIM breached their director’s duties by failing to act with the proper degree of care and diligence regarding transactions involving the LM Managed Performance Fund (MPF), an unregistered managed investment scheme with about 4,500 investors.

The MPF loaned funds to Maddison Estate Pty Ltd, to complete a property development on the Gold Coast known as Maddison Estate. ASIC's case focused on a decision of the directors to extend the loan in 2012.

ASIC is reviewing the court's decision and deciding whether it wishes to appeal.

LMIM was the responsible entity for seven registered managed investment schemes as well as the trustee for MPF. More than $400 million was invested in MPF. In total, LMIM was responsible for managing at least $800 million on behalf of approximately 12,000 investors in Australia and overseas.

ASIC's claim against Simon Ticker and Lisa Darcy was dismissed by consent on 12 September 2016.

ASIC has taken other action and has been involved in other court proceedings arising out of the collapse of LMIM.