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20-212MR ASIC commences civil penalty proceedings against current and former directors of Linchpin and Endeavour for alleged breaches of duties
ASIC has commenced proceedings in the Federal Court of Australia against current and former directors of Linchpin Capital Group Ltd (Linchpin) and Endeavour Securities (Australia) Ltd (Endeavour) for allegedly breaching their duties as officers of a responsible entity of a registered managed investment scheme.
The defendants to the proceeding are:
- Ian Williams (current director of Endeavour and Linchpin);
- Paul Raftery (current director of Endeavour and Linchpin);
- Paul Nielsen (former director of Endeavour and Linchpin);
- Peter Daly (current director of Linchpin).
Messrs Williams, Nielsen and Raftery were directors of Endeavour when it operated the Investport Income Opportunity Fund (Fund). ASIC alleges that, while not appointed as a director, Mr Daly also acted as an officer of Endeavour. All four defendants were directors of Linchpin at the time of the alleged conduct.
In March 2019, in separate proceedings, ASIC successfully obtained orders against Linchpin and Endeavour for multiple contraventions of the Corporations Act relating to the operation of the Fund and a second managed investment scheme, operated by Linchpin, also called the Investport Income Opportunity Fund. ASIC alleges in the current proceedings that each of the defendants were personally involved in contravening conduct about which the Court made orders in March 2019. ASIC further alleges that the defendants failed to act in the best interests of investors in the Fund.
It is also ASIC’s case that Mr Daly and Mr Raftery made improper use of their positions as officers of Endeavour to gain a financial advantage for themselves.
ASIC is seeking declarations of breaches of s601FD of the Corporations Act and the imposition of civil penalties as well as orders that Mr Williams, Mr Nielsen, Mr Daly and Mr Raftery be disqualified from acting as directors for a period of time.
The first case management hearing is listed on 22 September 2020.
In March 2019, ASIC obtained orders in the Federal Court against Linchpin and Endeavour for contravening multiple provisions of the Corporations Act while operating two managed investment schemes, both called ‘Investport Income Opportunity Fund’. The court made orders to wind up Endeavour, Linchpin and the two Investport Income Opportunity Funds (19-065MR).
In November 2019, ASIC banned Mr Williams, Mr Nielsen, Mr Daly and Mr Raftery from providing any financial services for a period of five years (19-320MR and 20-122MR). Mr Daly’s appeal to the Administrative Appeals Tribunal in respect of his banning is ongoing.
On 22 September 2020, a further case management hearing was scheduled for 4 December 2020.
Editor's note 2:
The case management hearing has been re-listed for 14 December 2020.
Editor's note 3:
The case management hearing has been re-listed for 18 February 2021.
Editor's note 4:
A further case management hearing has been set for 5 March 2021.
Editor's note 5:
A further case management hearing has been set for 26 March 2021.
Editor's note 6:
A further case management hearing has been set for 5 May 2021.
Editor's note 7:
A further case management hearing has been set for 27 August 2021.
Editor's note 8:
The case management hearing on 27 August 2021 has been vacated. This proceeding has been listed for a two week hearing commencing on 7 March 2022 in the Federal Court.
Editor's note 9:
A further case management hearing has been set for 17 February 2022.
Editor's note 10:
On 7 to 11 March 2022, the trial against the current and former directors of Endeavour and Linchpin was heard before Her Honour Justice Cheeseman. The Court has reserved its judgment. Prior to the commencement of the trial, Messrs Ian Williams, Paul Raftery and Paul Nielsen each elected not to contest ASIC’s case.