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15-173MR ASIC bans former director of Provident Capital Limited
Following an investigation, ASIC has banned Mr John Patrick Sweeney of Sydney from providing financial services for two years. ASIC found Mr Sweeney failed to comply with financial services laws.
Mr Sweeney was a non-executive director of Provident Capital Limited (Provident Capital) from 30 July 2008 to 7 May 2014. Provident Capital went into receivership on 3 July 2012 and into liquidation on 24 October 2012.
ASIC suspended Provident Capital’s Australian Financial Services Licence on 15 October 2012.
ASIC’s investigation found Mr Sweeney engaged in misleading or deceptive conduct in relation to a financial product. This specifically related to his conduct from September 2010 to March 2012 when he approved Provident Capital's Quarterly Reports and Benchmark Reports issued to ASIC and Australian Executor Trustees Limited.
'ASIC and the community expect directors of companies to behave in a manner appropriate to their position.' ASIC Commissioner John Price said.
'ASIC's action against Mr Sweeney demonstrates ASIC will take action against people who fail to meet their obligations.'
Mr Sweeney has the right to appeal to the Administrative Appeals Tribunal (AAT) for a review of ASIC’s decision.
ASIC’s investigation into Provident Capital is continuing.
On 20 February 2015 ASIC banned managing director of Provident Capital Limited, Mr Michael Roger O’Sullivan of Sydney from managing corporations for five years and from providing financial services for seven years (refer: 15-033MR). Mr O'Sullivan has sought a review of ASIC's decision in the Commonwealth AAT.
Provident Capital issued debentures to retail investors through their Fixed Term Investment Portfolio and advanced the debenture funds to third party borrowers, including property developers, on a first mortgage basis.
Provident Capital also operated a mortgage fund under a wholesale facility with Bendigo and Adelaide Bank and two managed investment schemes.
On 29 June 2012, on an application by the Australian Executor Trustees Limited, the trustee for Provident debenture holders, the Court ordered that receivers be appointed to Provident. ASIC appeared as a ‘friend of the court’ in these proceedings.
When Provident Capital went into liquidation on 24 October 2012 over 3,000 Provident debenture holders were owed approximately $130 million.
Provident’s receivers (PPB Advisory) have estimated that the likely return to debenture holders will be in the range of $0.17 to $0.19 in the dollar.
On 27 July 2015, Mr Sweeney lodged an appeal to his banning with the AAT.
Editor's note 2:
On 8 November 2017 the Administrative Appeals Tribunal (AAT) affirmed ASIC’s decision of 29 June 2015 to ban Mr Sweeney from providing financial services for two years (refer: 15-173MR). Mr Sweeney has served his banning period, which concluded on 1 July 2017. A copy of the AAT's decision and reasons for decision can be found here.