The Supreme Court of Queensland has found that Dr Roger Munro breached the Corporations Act by carrying on a financial services business in Australia without holding an Australian financial services (AFS) licence and has permanently restrained him from doing so.

On 24 July 2015, ASIC made an application for orders pursuant to sections 1101B and 1324 of the Corporations Act for:

• declarations that Dr Munro had been carrying on a financial services business without holding an AFS licence and that Kathleen Munro had either been carrying on a financial services business without holding an AFS licence, or aiding or abetting Dr Munro to do so.
• injunctions aimed at restricting Dr Munro and Kathleen Munro from continuing to carry on a financial services business in Australia, and
• a disclosure order which directed Dr Munro to provide ASIC with information about his fundraising activities and the location of investor funds.

ASIC alleged that since August 2011, Dr Munro has, with the assistance of Kathleen Munro, operated an unlicensed financial services business in Australia and raised over $1.5 million from investors, friends and family for trading purposes. (refer: 15-201MR)

During the trial of the proceeding, three investors gave evidence that:

• Dr Munro approached the investors about investing in a trading group, which he subsequently called “Tradestation Futures”.
• the investors paid money to Dr Munro as investments in Tradestation.
• some investors signed an agreement with Dr Munro relating to their investment in Tradestation.
• the investors received quarterly returns from Dr Munro for a period.
• each investor received a number of quarterly reports from Dr Munro about their investments, and
• each investor is still owed significant sums by Dr Munro, including one investor who is owed $500,000.

The Supreme Court did not accept Dr Munro's assertion in defending the matter that the funds were advanced by the investors as unsecured personal loans to TradeStation or Tradestation futures. The Court found that the arrangement between the investors and Dr Munro was one by which Dr Munro was seeking to trade on behalf of investors using pooled funds.

The court declared that Dr Munro had contravened section 911A of the Corporations Act and ordered that he be permanently restrained from carrying on a financial services business in this jurisdiction, without holding an AFS licence. In making the declaration, the court stated that Dr Munro "has sought and obtained funds from investors within Australia who have paid him large sums of money for trading in international markets in circumstances where he does not hold an AFSL. In such circumstances the public interest and the marking of the Court’s disapproval of such conduct makes it appropriate to grant some form of declaratory relief".

The orders made by the Court do not prevent Dr Munro or Kathleen Munro from returning money to past investors.

A disclosure order was also made by the Court on 7 August 2015 which required Dr Munro to provide ASIC with information about his fundraising activities and the location of investor funds. This matter remains before the court.

Dr Munro and Kathleen Munro were ordered to pay ASIC's costs of the proceeding.

Commissioner Greg Tanzer said, 'Consumers should not invest with a person or entity in Australia unless they are authorised by, or hold an, AFS Licence. The Australian financial services licensing regime provides safeguards for consumers, including adequate compensation arrangements for retail clients.'

ASIC's investigation is continuing.

Read and download the judgement here.