ASIC has commenced civil proceedings in the Federal Court against Mustafa Mohammed, Mahek Mustafa, Mubashir Mohammed, MyWealth Manager Financial Services Pty Ltd (trading as MyWealth Manager), MyWealth Protection Pty Ltd, 3M Financial Planning Pty Ltd (trading as MCube Planners) and Secure Investments Pty Ltd (together the Defendants).
ASIC is seeking declarations from the Federal Court that the Defendants have contravened the Corporations Act by operating an unregistered managed investment scheme called ‘MyWealth Manager’. ASIC alleges the scheme should have been registered and that the Defendants operated the scheme without holding an Australian Financial Services (AFS) licence.
On 21 November 2019, ASIC obtained interim orders in relation to the Defendants, including orders:
- appointing Tim Norman and Rob Woods of Deloitte as Receivers and Managers of MyWealth Manager Financial Services Pty Ltd and 3M Financial Planning Pty Ltd;
- restraining the assets of the remaining Defendants;
- restraining the Defendants from carrying on a financial services business in this jurisdiction without an AFS licence;
- restraining the Defendants from managing, directing, controlling or otherwise operating the unregistered scheme; and
- restraining the Defendants receiving, soliciting, transferring or disposing of investor funds received in connection with the unregistered scheme.
ASIC alleges Mustafa Mohammed operated My Wealth Manager from February 2017and targeted consumers from certain ethnic and cultural backgrounds.
ASIC alleges the scheme has raised approximately $7 million from more than 55 investors where investors were encouraged to roll over their externally managed superannuation into newly created self-managed superannuation funds (SMSFs) and then invest the SMSF monies, by way of a loan, in MyWealth Manager.
ASIC also alleges that the Defendants used investor funds for their own personal use, including substantial payments to friends and family members and the promotion of cryptocurrency.
ASIC’s investigation is continuing.
The hearing has been adjourned to a date to be fixed after 5 December 2019.
Background
Mustafa Mohammed was an authorised representative of AMP from October 2013 to March 2017.
ASIC’s action against the Defendants falls within ASIC's Wealth Management Major Financial Institutions Portfolio. The Portfolio focuses on the financial services conduct of Australia's largest financial institutions (NAB, Westpac, CBA, ANZ, Macquarie and AMP) with respect to credit and retail lending, financial advice, fees for no service, superannuation trustees, insurance, unfair contract terms and other licensee obligations, and other conduct arising from the Financial Services Royal Commission.
Editor's note:
On 13 December 2019, ASIC obtained Orders from the Federal Court appointing receivers over assets held by Mustafa Mohammed, Mahek Mustafa, Mubashir Mohammed. The Court also extended the time for the receiver to produce his report until 31 January 2019 due to the receiver experiencing delay in regards to the production of books. The matter will return to Court on 3 March 2020.
Editor's note 2:
On 30 January 2020, the Receivers and Managers of MyWealth Manager Financial Services Pty Ltd and 3M Financial Planning Pty Ltd and the assets of Mustafa Mohammed, Mahek Mustafa, Mubashir Mohammed, successfully applied to freeze the assets of MyWealth Protection Pty Ltd and Secure Investments Pty Ltd.
On 3 March 2020, the Federal Court set down the trial for the proceeding on 13 July 2020.