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Thursday 9 July 2015

15-179MR Director of Responsible Entity banned from providing financial services

ASIC has banned Mr David Hodgson, of the Sunshine Coast, Queensland, from providing financial services for two years after an ASIC investigation found that Mr Hodgson, a director of Exalt Global Funds Limited (Exalt), failed in his duty to ensure that Exalt complied with its obligations as a Responsible Entity under the Corporations Act (the Act).

Exalt has held an Australian financial services (AFS) licence since September, 2011.

During the period March 2013 to July 2014 Exalt, was found to have:

  • made misleading statements in Product Disclosure Statements. These documents made statements to the effect that an investment in the Paladin Monetizer Fund (ARSN 153 294 083) was low risk when such statements were false;
  • failed to have kept proper financial records forthe Paladin Monetizer Fund (ARSN 153 294 083);
  • failed to lodge with ASIC:
    • annual Profit and Loss statements and Balance Sheets for Exalt for the financial years ended 30 June 2013 and 30 June 2014;
    • Financial Reports and Director's Report for Exalt and the Paladin Monetizer Fund (ARSN 153 294 083) for the financial years ended 30 June 2013 and 30 June 2014;
    • an audited Compliance Plan for the Paladin Monetizer Fund (ARSN 153 294 083) for the financial years ended 30 June 2013 and 30 June 2014.

Mr Hodgson initially did not register the Paladin Monetizer Fund and relied on a fundraising exemption under section 708 of the Act. However, as the fundraising approached the limits of the exemption, he arranged for the investors in the unregistered scheme to be 'transitioned' into the registered Paladin Monetizer Fund (ARSN 153 294 083). This transition was not effective and as a result, the Paladin Monetizer Fund (ARSN 153 294 083) has been unable to meet its compliance obligations with ASIC.

ASIC Commissioner Greg Tanzer said, 'Responsible Entities are entrusted with property that belongs to others and accordingly, are held to a high standard by ASIC. The directors of Responsible Entities must take their compliance obligations seriously or risk being removed from the financial services industry.'

Following concerns raised by ASIC, the Paladin Monetizer Fund (unregistered) and the Paladin Monetizer Fund (ARSN 153 294 083) are no longer in operation. Exalt has also requested its AFS licence be cancelled.

Last updated: 09/07/2015 12:00