ASIC has commenced proceedings in the Federal Court of Australia against Linchpin Capital Group Ltd (Linchpin) and Endeavour Securities (Australia) Ltd (Endeavour).

Linchpin and Endeavour operate two managed investment schemes. Both schemes are called “Investport Income Opportunity Fund”.

Following an investigation, ASIC alleges that:

• Linchpin is operating the scheme without holding an Australian Financial Services Licence as required by the Corporations Act;
• Linchpin has used investor funds for its own purposes without disclosing this use to investors;
• Endeavour has entered into related party transactions in contravention of the Corporations Act;
• Endeavour has failed to properly disclose those related party transactions to investors; and
• monies invested in the schemes managed by Linchpin and Endeavour have been misapplied or misappropriated by Linchpin and Endeavour.

ASIC is seeking orders to:

• restrain Linchpin and Endeavour from operating the schemes and providing financial services;
• prevent Linchpin and Endeavour from dealing with assets or investor funds;
• appoint receivers over the assets of Linchpin and Endeavour to identify and secure scheme assets;
• wind-up Linchpin and Endeavour and the schemes; and
• obtain declarations that Linchpin and Endeavour have acted in contravention of the Corporations Act.

The matter will be heard in the Federal Court in Brisbane on 24 July 2018.

ASIC's investigation is continuing.

Editor's note:

On 26 July 2018 the Court made the following interim orders in this matter:

• Linchpin and Endeavour are restrained from dealing with the assets or investor funds, except in the course of paying their ordinary business expenses reasonably incurred;
• Linchpin is restrained from providing financial services advice, and dealing, operating or promoting the unregistered managed investment scheme; and
• Endeavour is restrained from operating or promoting the registered managed investment scheme or promoting or carrying on any financial services business in connection with that scheme.

The Court adjourned the matter for further mention on a date to be fixed.