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20-257MR ASIC obtains Court orders to wind up unlicensed SMSF financial service businesses
The Federal Court has ordered the winding up of unlicensed financial services businesses, Secure Investments Pty Ltd (Secure Investments) and Aquila Group Pty Ltd (Aquila Group).
The Court declared Secure Investments and Mr Mudasir Naseeruddin breached the Corporations Act by operating a financial services business without holding an Australian financial services licence. In making this finding, Justice Derrington stated:
“Secure Investments was carrying on a financial services business by issuing financial products to investors. It held itself out as being engaged in the business of providing direct property development investment opportunities for investors and the evidence discloses that it received approximately $2.4 million in funds from 28 different SMSFs in the period from early 2017 to late 2019. Its conduct of issuing those financial products was repetitive and continuing for commercial or business purposes and was done in order to derive income. As such, it was engaged in those activities for the purpose of carrying on a business. As it was not authorised pursuant to any relevant AFSL to carry on that business, Secure Investments contravened the prohibition in s 911A of the Act.”
Mr Naseeruddin encouraged investors to roll over their superannuation accounts into self-managed superannuation funds (SMSFs) set up by an associate of Mr Naseeruddin. ASIC alleges that investor funds were then transferred via a cash management account to Secure Investments. ASIC further alleges that significant amounts of the funds held by Secure Investments were then transferred out to accounts held by Mr Naseeruddin and various other related entities with no identifiable corporate purpose and funds have not been repaid to investors.
After ASIC issued separate proceedings against Secure Investments in November 2019 (19-337MR), Aquila Group, through its director Mr Naseeruddin, raised a further $250,000 from investors. In relation to Aquila Group, the Court stated:
“… the financial management of Aquila Group under the control of Mr Naseeruddin replicated that of his erstwhile stewardship of the affairs of Secure Investments. That is to say that, whilst Mr Naseeruddin and Aquila Group received funds from investors for investing in building developments, those investments did not materialise. The funds were used for other purposes and dispersed without any proper recording of the transactions which justified such payments.”
A further question in the proceeding of whether the defendants made false and misleading statements to investors, in contravention of the Corporations Act, has been adjourned to a date to be fixed.
Timothy Norman and Robert Woods of Deloitte Financial Advisory Pty Ltd have been appointed as liquidators for Secure Investments and Aquila Group.
ASIC’s investigation is continuing.