The Federal Court has made permanent injunctions against social media finfluencer Tyson Robert Scholz, prohibiting him from carrying on a financial services business in Australia in contravention of the Corporations Act.
In December 2022, the Court found Mr Scholz had contravened s911A of the Corporations Act by carrying on a financial service business between March 2020 and November 2021, without an Australian financial services licence (22-371MR).
The Court has now permanently prohibited Mr Scholz from:
- hosting online groups for which a membership fee is charged, and in which messages are exchanged by members about share trades (either in a group chat or through direct messages from Mr Scholz), without an Australian Financial Services Licence; and
- carrying on a financial services business in Australia in contravention of s911A of the Corporations Act.
ASIC Deputy Chair Sarah Court said, ‘Financial services laws exist for the protection of investors. ASIC sought permanent injunctions in this case because the people who paid Mr Scholz to access private online forums where he made recommendations about shares, as well as those people who purchased shares based on these recommendations, did not have the benefit of these protections.
‘Anyone who recommends financial products or provides financial advice on social media must ensure they are complying with the law and may face ASIC enforcement action when they are not.’
Mr Scholz’s business to paying subscribers included:
- subscription/membership fees of $500, $1,000 or $1,500
- offers of various levels of share trading training, referred to as ‘Stage 1’, ‘Stage 2’ and ‘Stage 3’, which were marketed as introductory to advanced
- the Stage 2 package providing one year’s access to a private chat site, named ‘Black Wolf Pit’, using the online communications platform Discord.
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Background
In December 2021, ASIC filed proceedings in the Federal Court seeking orders restraining Mr Scholz from promoting or carrying on any financial services business in Australia. On 16 December 2021, the Federal Court made interim orders by consent that Mr Scholz be restrained from promoting or carrying on a financial services business. Those orders were made pending determination of ASIC’s claim for a permanent restraint, which was heard by the Court at a contested hearing in October 2022.
ASIC has provided advice for social media influencers who discuss financial products and services online, see Information Sheet 269 Discussing financial products and services online (INFO 269).
Editor's note 1:
On 13 April 2023, the Honourable Justice Downes ordered that Mr Scholz pay the costs of the proceedings and on 22 June 2023, Judicial Registrar Allaway ordered those costs be assessed and fixed on a lump sum basis in the amount of $456,296.64.
Following Mr Scholz’s failure to pay this amount, ASIC served a Bankruptcy Notice on Mr Scholz on 24 July 2023 and then filed a Creditor’s Petition on 18 October 2023. The Petition was scheduled for hearing on 8 February 2024 and subsequently adjourned until 22 February 2024.