The former director of Reiwa-Capital, Russell Sandiford, has pleaded guilty to two counts of dishonest conduct in relation to a financial product contrary to section 1041G of the Corporations Act, following an ASIC investigation.

Between January 2020 and June 2022 Mr Sandiford obtained $440,909.71 from 74 clients on the basis of investing for trading activity that was to be undertaken by him.  The money was not used for trading as represented and agreed but was primarily used for personal expenses or purposes unrelated to trading.

Mr Sandiford primarily contacted clients using email addresses he obtained when previously employed as a market trader and analyst at various brokerage firms, inviting them to participate in one of two investment opportunities.

A ‘Hedge Fund’ which offered, for a nominal one-off fee, a split of profits from a trading account operated by Mr Sandiford trading foreign exchange products and commodities – and an ‘Income Fund’ which offered an option under which investors would pay a capital investment amount on the basis it would be paid into a larger pool of funds to be used to trade foreign exchange products and commodities for the profit of investors.

The money was deposited into specified bank accounts operated by Mr Sandiford.  A total of $6,316.68 of the $440,909.71 received was paid back to investors.

At the time of the offending, Mr Sandiford was not licensed to provide financial product advice.

Mr Sandiford first appeared in the Downing Centre Local Court on 21 March 2023, and pleaded guilty to the charges on 13 February 2024.

The matter is before the Sydney District Court on 15 March 2024, at which time the date for a sentencing hearing will be set.

The matter is being prosecuted by the Commonwealth Director of Public Prosecutions following a referral from ASIC.

Background

Engaging in dishonest conduct in relation to a financial product or financial service in the course of carrying on a financial services business is an offence contrary to section 1041G of the Corporations Act.

The maximum penalty is 15 years imprisonment or the greater of $945,000 or a fine of three times the total value of the benefits, or both.

Editor's Note 1:

On 15 March 2024 the matter was set for a sentencing hearing to be held on 31 May 2024 in the NSW District Court.

Editor's Note 2:

On 31 May 2024, the sentence hearing was adjourned to 6 September 2024. The matter is also listed for mention on 5 July 2024.