The Australian Securities and Investments Commission (ASIC) has obtained consent orders in the Federal Court of Australia that permanently disqualify Mr James Stanley Phillips and Mr Ian Francis Cole from managing corporations.

Mr Phillips is the managing partner of Landy and Company DFK (Landy & Co), a Melbourne-based accounting firm, and Mr Cole is a senior accountant at Landy & Co.

The Court also permanently restrained Mr Phillips, Mr Cole and entities associated with them (Landy & Co, CG Landy Services Pty, Landy DFK Securities Limited and Terra Firma Project Management Pty Ltd) from:

• directly or indirectly operating managed investment schemes;
• carrying on a financial services business; and
• accepting or dealing in money from clients or the public for the purpose of investment in any financial product, or lending those funds to any person or entity.

Finally, the Court ordered the winding up of two property trusts, the Faithful Street (Wangaratta) Property Trust and the Fyans Street (Geelong) Property Trust. Terra Firma Project Management Pty Ltd (Terra Firma) was trustee of the two trusts. All orders were obtained by consent.

ASIC alleged that the two trusts were unregistered managed investment schemes that required registration, and that they were not being operated by a licensed responsible entity, as required by law. ASIC also alleged that the trusts were mismanaged and that some of the defendants provided securities and investment advice when they were not licensed to do so.

On 2 May 2002, the Court made interim orders replacing Terra Firma as trustee of the two property trusts with Mr Clyde White and Mr Philip Newman of MGI Meyrick Webster.

All parties, including unit-holders of the property trusts, have now agreed to the winding up of the trusts, following reports by the new trustees that detailed significant irregularities in relation to the management of the trusts, including the mixing of trust assets and the misuse of trust funds, which were loaned to entities related to Mr Phillips and Mr Cole without proper documentation or proper disclosure to unit-holders.

Mr Phillips' permanent disqualification from managing corporations contains a limited exception relating to two corporations that control Mr Phillips' personal affairs, and CG Landy Services Pty to the extent that it provides only accounting and administrative services to Landy & Co.

The injunction against CG Landy Services Pty contains an exemption permitting CG Landy Services Pty to loan money to Landy & Co for the sole purpose of Landy & Co's accountancy practice. There are no exceptions to Mr Cole's disqualification.

Landy DFK Securities Ltd (Landy Securities) previously held a restricted dealers' licence. Landy Securities' restricted dealers licence was revoked following an enforceable undertaking to ASIC that it would surrender its licence on 8 July 2002.

The defendants were ordered to pay ASIC's costs of the Court proceeding.