ASIC investigation into Mayfair 101

ASIC will update this webpage when important steps take place in relation to this matter. We suggest you visit this page regularly for updates.

Latest news

23 March 2021 - ASIC succeeds in Court action against Mayfair 101 for misleading and deceptive advertising                    

The Federal Court has found companies in the Mayfair 101 Group made statements that were false, misleading or deceptive in advertisements for its debenture products, following proceedings brought by ASIC in April 2020.

The Court found Mayfair Wealth Partners Pty Ltd and Online Investments Pty Ltd trading as Mayfair 101, M101 Nominees Pty Ltd and M101 Holdings Pty Ltd, engaged in misleading or deceptive conduct, and made false or misleading representations, by representing that:

  • Mayfair’s debenture products were comparable to, and of similar risk profile to, bank term deposits, when Mayfair’s debenture products exposed investors to significantly higher risk than bank term deposits (Bank Term Deposit Representation);
  • the principal investment would be repaid in full on maturity, when investors might not receive capital repayments on maturity, or at all, as Mayfair could elect to extend the time for repayment for an indefinite period of time; and
  • Mayfair’s debenture products were specifically designed for investors seeking certainty and confidence in their investments and therefore carried no risk of default, when there was a risk that investors could lose some, or all, of their principal investment.

The Court also found Mayfair 101 and M101 Nominees engaged in misleading or deceptive conduct and made false or misleading representations by representing that the M Core Fixed Income Notes were fully secured financial products, when funds invested were:

  • lent to a related party and not secured by first-ranking, unencumbered asset security or on a dollar-for-dollar basis or at all;
  • used to pay deposits on properties prior to any security interest being registered; and
  • used to purchase assets that were not secured by first-ranking, unencumbered asset security.

In his judgment, Justice Anderson found that the Bank Term Deposit Representation ‘was misleading or deceptive and created a false and misleading impression that the Mayfair Products were comparable to, and of similar risk profile to, bank term deposits… In light of the evidence relied on by ASIC, the Mayfair Products are not comparable to, or a proper alternative to, bank term deposits.’

Justice Anderson noted, in relation to the use of sponsored link internet advertising, that ‘it is tolerably clear that the Defendants’ marketing strategy was addressed to persons searching for a term deposit in order to divert them to the Defendants’ websites.’

Justice Anderson also stated ‘I am satisfied that the Mayfair Products have been, in fact, designed by the Defendants to produce a result which is uncertain for investors and could not on any reasonable view be described as an investment with no risk of default.’

Justice Anderson found that ‘Mr Mawhinney was the directing mind and will, and the ultimate beneficiary, of each of the Defendants’.

ASIC Deputy Chair Karen Chester said ‘ASIC’s success in Court today demonstrates firms need to do the right thing by their investors, even when they are wholesale investors. They need to make sure they accurately describe their products when advertising. The Court has shown that Mayfair 101 engaged in misleading and deceptive conduct by claiming its products were comparable to bank term deposits, when they were not.

‘Our ‘True to Label’ project that we commenced in late 2019 identified 30 funds with over $10 billion across these funds, that are misleading investors through online advertising, especially when investors are seeking yield in a low interest rate economy. The online advertising is misleading by claiming to offer products that involve less risk, when in reality, investors could lose some or all of their investments. Advertisements also claimed investors could get their invested money out when they wanted but that was not the case. This case is a warning that ASIC will not only take action where investments are marketed as safer, lower risk, or more liquid when they are not, but when search engines are used in a misleading or deceptive way to entice investors to products they are not searching for.’

ASIC is seeking pecuniary penalties, injunctions and corrective advertising. A penalty hearing is yet to be listed by the Court.

Download

For more information please see ASIC’s media release issued on 23 March 2021 (21-055MR).

31 January 2021 – ASIC succeeds in winding-up Mayfair 101 debenture issuer

Following an application by ASIC, the Federal Court has ordered the winding up of M101 Nominees Pty Ltd, which issued secured debentures promoted by Mayfair 101 known as M Core Fixed Income Notes.

This is the first final outcome arising from ASIC’s court actions issued against Mayfair 101 Group companies and their director James Mawhinney.  In this action, ASIC sought to protect the assets of M101 Nominees and the interests of M Core noteholders in circumstances where:

  • the product issuer had informed current investors of a liquidity event;
  • there appeared to be insufficient funds to repay investors; and
  • external administrators appointed to other products issued by the Mayfair 101 Group had raised concerns about how the investments had been dealt with to the detriment of investors. 

On 29 January 2021, the Court ordered that M101 Nominees be wound up on just and equitable grounds, and appointed Said Jahani and Philip Campbell-Wilson of Grant Thornton as liquidators, after having previously appointed them as provisional liquidators in order to preserve the assets of the company pending the determination of ASIC’s winding up application (20-205MR).

M101 Nominees raised approximately $67 million from investors during 2019 and 2020 based on representations that funds invested would be fully secured, when they were not. M101 Nominees stopped repaying funds to investors in March 2020 and froze interest payments to investors from June 2020.

On 24 September 2020, the provisional liquidators concluded that:

  • M101 Nominees had been insolvent since it began in October 2019;
  • the business model of M101 Nominees was unsustainable because it was raising funds from M Core noteholders on a short-term basis (predominantly 6-12 months) and on-lending to a related entity, Eleuthera Group Pty Ltd, for a term of 10 years. On this basis, M101 Nominees would not have adequate funds to repay noteholders as their investments fell due;
  • distributions and redemptions paid to M Core noteholders were funded from money raised from other M Core noteholders, or to a lesser extent, from investors in unsecured debentures promoted by Mayfair 101 known as M+ Fixed Income Notes;
  • the security provided to the Security Trustee on behalf of the M Core noteholders holds little value as it specifically excluded real estate assets, which were the only tangible assets held by the Mayfair 101 Group entities and trusts giving the security; and
  • the realisable value of M101 Nominees’ assets is negligible and insufficient to repay M Core noteholders’ investments.

The defendants consented to the orders made by the Court. The Court will publish reasons for its decision at a later date.

The Mayfair 101 Group owes approximately $211 million to those who invested in its various products, including the M Core Fixed Income Notes, M+ Fixed Income Notes, the IPO Wealth Fund, IPO Capital and Australian Property Bonds.

ASIC Acting Chair, Karen Chester stated, ‘ASIC moved decisively early last year, directly and then ultimately through the courts, to restrain Mayfair from promoting these allegedly misleading products and to protect not only potential new investors but also the interests of existing investors. This action is one of several we have underway (under our project True to Label) targeting fund managers not doing the right thing by investors. Especially those fund managers preying on unsophisticated investors, such as older Australians and retirees in regional Australia.’

ASIC is also seeking orders that Mr Mawhinney, be permanently restrained from certain activities, including advertising any financial product and soliciting funds in connection with any financial product (20-205MR). That matter will be heard by the Court on 15 February 2021.

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For more information please see ASIC’s media release issued on 31 January 2021 (21-012MR).

2 September 2020 - ASIC obtains interim injunctions against James Mawhinney and appointment of provisional liquidators to Mayfair debenture issuer

ASIC has obtained interim orders in the Federal Court of Australia against companies in the Mayfair 101 group and their director, James Peter Mawhinney, including the appointment of provisional liquidators to M101 Nominees Pty Ltd, the issuer of the M Core Fixed Income Notes promoted by Mayfair 101.

On 13 August 2020, the Court appointed Said Jahani and Philip Campbell-Wilson of Grant Thornton as provisional liquidators of M101 Nominees, pending an application by ASIC to wind up M101 Nominees on just and equitable grounds. ASIC alleges that M101 Nominees has been involved in breaches of the corporations legislation, and there is a justifiable lack of confidence in the conduct and management of its affairs that gives rise to a risk to the public that warrants protection.

In particular, ASIC alleges that M101 Nominees raised approximately $67 million from investors through debentures called the M Core Fixed Income Notes, based on representations that there would be security for the full amount invested. ASIC further alleges that those funds were not fully secured, and consequently, M Core Fixed Income Note investors may be unable to recover the full amount of their principal investment.

The provisional liquidators will provide a report to the Court by 24 September 2020 about the provisional liquidation of M101 Nominees, including identifying its assets and their value, and providing an opinion as to solvency and the likely return to creditors if the company is wound up.

On 13 August 2020, the Court made additional interim orders restraining Mr Mawhinney, and any company of which he is an officer or shareholder, from:

  • Receiving or soliciting funds in connection with any financial product;
  • Advertising or promoting any financial product; and
  • Removing from Australia any assets acquired with funds received in connection with any financial product.

These orders apply to all products currently offered by Mayfair 101, including the M Core Fixed Income Notes, the M+ Fixed Income Notes and Australian Property Bonds, as well as any other financial product.

The Court also restrained Mr Mawhinney from leaving Australia until further order.

The Court made interim orders restraining Sunseeker Holdings Pty Ltd, of which Mr Mawhinney is a director, from dealing with the units in 14 trusts which hold property at Mission Beach and Dunk Island in Queensland. The units in those trusts are part of the security held on behalf of investors in the M Core Fixed Income Notes.

At a hearing on 2 September 2020, the matter was adjourned for a further case management hearing on a date to be fixed.

ASIC’s investigation is ongoing.

Download

For more information please see ASIC’s media release issued on 2 September 2020 (20-205MR).

17 April 2020 – Federal court restrains Mayfair 101 and Mayfair Platinum from promoting debenture products and using prohibited phrases in advertising

On 16 April 2020, the Federal Court made interim orders restraining Mayfair Wealth Partners Pty Ltd (Mayfair Platinum) and Online Investments Pty Ltd (Mayfair 101) from promoting their debenture products and prohibiting the use of specific words and phrases in their advertising.

Mayfair Platinum and Mayfair 101 promote M+ Fixed Income Notes and M Core Fixed Income Notes, their debenture products available to wholesale investors (Mayfair debenture products). Payment of redemptions of capital to investors in the Mayfair debenture products was suspended on 11 March 2020 due to liquidity issues.

On 16 April 2020, Justice Anderson of the Federal Court restrained Mayfair Platinum and Mayfair 101, until further order, from:

  • All advertising, promotion and marketing of the Mayfair debenture products; and
  • Using the below prohibited phrases in any advertising, promotion or marketing of any products, including on their websites and through sponsored link advertising, including, via Google AdWords and Bing Ads:
    • “term deposit”;
    • “bank deposit”;
    • “capital growth”;
    • “certainty”;
    • “fixed term”; and
    • “term investment”.

The Court also ordered that Mayfair Platinum and Mayfair 101 must post the following notice on their websites, and give a copy of the following notice to each prospective new investor in the Mayfair debenture products:

“The Mayfair 101 Group of companies reminds investors prior to investing in the products offered by the Mayfair 101 Group that:

  1. Mayfair 101 is not a bank, and nor are any of the companies in the Mayfair 101 Group. Therefore, the Mayfair 101 Group is not regulated by the Australian Prudential Regulation Authority (APRA) and investment in its products is not covered by the Australian Government’s Financial Claims Scheme (colloquially known as the ‘Government Bank Guarantee’ which covers deposits up to A$250,000 per depositor, per bank).
  2. As with all investment products, there are risks in investing in the Mayfair 101 Group’s products.
  3. Investing in the products offered by the Mayfair 101 Group is not the same as depositing money in a term deposit offered by a bank. Investing in Mayfair 101 Group products has a higher level of risk compared to investing in a bank term deposit.
  4. In certain circumstances, the Mayfair 101 Group can exercise the right to suspend some or all redemptions at the end of the fixed term. The Mayfair 101 Group exercised this right on 11 March 2020. As such, all redemptions are currently suspended until such time as management agrees to lift the suspension and process redemptions. Your investment in the products offered by the Mayfair 101 Group may also be subject to suspension of some or all redemptions at the end of the fixed term. This is a risk that you should take into account.”

For more information:

6 April 2020 – ASIC commences proceedings against Mayfair 101 and Mayfair Platinum for misleading or deceptive advertising

On 3 April 2020, ASIC commenced proceedings in the Federal Court of Australia against companies in the Mayfair 101 group, alleging that its advertisements, promoted on Mayfair’s websites and in online media, are misleading or deceptive.

Mayfair Wealth Partners Pty Ltd, trading as Mayfair Platinum, and Online Investments Pty Ltd, trading as Mayfair 101, promote two debenture products to wholesale investors (Mayfair debenture products):

  • M+ Fixed Income Notes, which are unsecured promissory notes issued by M101 Holdings Pty Ltd; and
  • M Core Fixed Income Notes, which are secured promissory notes issued by M101 Nominees Pty Ltd.

ASIC alleges that Mayfair Platinum and Mayfair 101 made statements that were false, misleading or deceptive by representing that:

  • Mayfair debenture products are comparable to bank terms deposits, and have a similar risk profile to bank term deposits, when they are debentures with a significantly higher risk profile;
  • the principal investment will be repaid in full on maturity, when investors may not receive capital repayments on maturity or at all, and because Mayfair could elect to extend the time for repayment for an indefinite period;
  • Mayfair debenture products were specifically designed for people seeking “certainty and confidence in their investments”, when investors may not receive interest and/or capital repayments, and could lose some, or all, of their investment; and
  • Mayfair debenture products provide capital growth opportunities, when they do not.

ASIC is seeking injunctions to restrain the publication of statements of this kind, and pecuniary penalties in relation to the alleged false or misleading representations.

On 11 March 2020, Mayfair Platinum suspended payment of capital redemptions to investors in the Mayfair debenture products due to liquidity issues. In light of this, ASIC is also seeking an interim injunction to restrain the defendants from promoting and issuing the Mayfair products while redemptions to existing investors remain suspended. ASIC’s application for an injunction will be heard by the Federal Court on 14 April 2020 at 9.30am.

For more information please see ASIC’s media release issued on 6 April 2020 (20-080MR).

Download ASIC’s Amended Concise Statement and Amended Originating Process filed with the Court. ASIC does not press the claim against the defendants in relation to the Capital Growth Representations, as referred to in paragraphs 4 and 7(d) of the Amended Originating Process.

Information for Mayfair 101 Group investors

1. What should I do if I have invested in the M Core Fixed Income Notes?

  • On 29 January 2021, the Federal Court ordered that M101 Nominees Pty Ltd be wound up on just and equitable grounds, and appointed Said Jahani and Philip Campbell-Wilson of Grant Thornton as liquidators (21-012MR). M101 Nominees issued the M Core Fixed Income Notes.
  • Mr Jahani and Mr Campbell-Wilson had previously been appointed by the Court as provisional liquidators of M101 Nominees in August 2020 to preserve the company’s assets until ASIC’s winding up application was determined (20-205MR).
  • On 24 September 2020, the provisional liquidators provided their report to the Court about the provisional liquidation of M101 Nominees. A copy of the report can be downloaded from Grant Thornton’s website.
  • The liquidators will publish updates about the liquidation on Grant Thornton’s website.
  • M Core Fixed Income Note investors can direct any queries to the liquidators by email to M101@au.gt.com

2. What should I do if I have invested in the M+ Fixed Income Notes?

  • You should consider whether the investment continues to be suitable for your circumstances. You may wish to seek independent financial advice.
  • Investors are advised to be wary of investments that claim they are an alternative to a bank ‘term deposit’. If an investment provides higher returns than a term deposit, it is likely to be higher risk.
  • If you wish to redeem your investment:
    • Contact the product issuer, Mayfair 101.
    • You should ensure you fully understand how to end the investment and the deadline for giving any notice to do so.
    • From March 2020, Mayfair 101 has suspended redemptions of the M+ Fixed Income Notes for investors whose investments have matured. It is up to Mayfair 101 to decide when it will resume paying redemptions.
    • Investors can still make a request to Mayfair 101 to exit their investment despite redemptions having been suspended.

3. What should I do if I have invested in the IPO Wealth Fund?

  • The IPO Wealth Fund was an unregistered managed investment scheme promoted by Mayfair 101.
  • Money invested into the IPO Wealth Fund was loaned to IPO Wealth Holdings Pty Ltd, then on-loaned to various special purpose vehicles (SPVs) which invested in different products and entities.
  • On 22 May 2020, Hamish MacKinnon and Nicholas Giasoumi of Dye & Co were appointed as receivers and managers of the business and assets of IPO Wealth Holdings Pty Ltd and the SPVs on the application of Vasco Trustees Ltd, the trustee of the IPO Wealth Fund.
  • On 29 May 2020, Vasco and the receivers applied to wind up IPO Wealth Holdings Pty Ltd and the SPVs, and to appoint the receivers as provisional liquidators.
  • On 2 July 2020, the Supreme Court of Victoria appointed Hamish MacKinnon and Nicholas Giasoumi of Dye & Co as provisional liquidators of IPO Wealth Holdings Pty Ltd and the SPVs.
  • On 27 August 2020, the provisional liquidators provided a report to the Court about the provisional liquidation of the companies, including identifying the assets and liabilities of the companies, and providing an opinion as to solvency and the likely return to creditors if the companies are wound up.
  • On 17 September 2020, the Supreme Court of Victoria ordered that IPO Wealth Holdings Pty Ltd and the SPVs be wound up in insolvency and on just and equitable grounds, and appointed Hamish MacKinnon
    and Nicholas Giasoumi of Dye & Co as liquidators.

4. What should I do if I have invested in Australian Property Bonds?

  • You should consider whether the investment continues to be suitable for your circumstances. You may wish to seek independent financial advice.
  • If you wish to redeem your investment:
    • Contact the product issuer, Australian Income Solutions Pty Ltd trading as Australian Property Bonds.
    • You should ensure you fully understand how to end the investment and the deadline for giving any notice to do so.

5. Can I complain to the Australian Financial Complaints Authority (AFCA)?

If you invested in the IPO Wealth Fund – yes. The licensee of the IPO Wealth Fund, DH Flinders Pty Ltd, is a member of AFCA, therefore AFCA has the power to hear complaints about that product. AFCA can be contacted on 1800 931 678. The service is free to access.

If you invested in the M+ Fixed Income Notes, M Core Fixed Income Notes or Australian Property Bonds – no. The licensee of those products, Quattro Capital Group Pty Ltd, ceased being a member of AFCA on 4 March 2021, therefore AFCA no longer has the power to hear complaints about those products.

For more information, please refer to ASIC Information Sheet 174 Disputes with Financial Firms.

Reporting information to ASIC

Consumers that have concerns about their dealings with the Mayfair 101 group can lodge a report of misconduct with ASIC.

Last updated: 26/03/2021 12:18