ASIC roundup: A$1.8m penalty, and former secretary sentenced to prison

The Australian Securities & Investments Commission’s latest actions and news, March 11 – 22, 2024.

Travel ban on Managing Director of Dubber Corporation – March 22, 2024

Interim travel restraint orders have been put on Stephen Vincent McGovern, Managing Director and CEO of Dubber Corporation Limited, and Mark Madafferi, solicitor and principal of the law firm Christopher William Legal – preventing them from leaving or attempting to leave Australia until September 13, 2024, or until further orders.

An investigation started on March 1 when Dubber Corporation contacted ASIC and the ASX saying that McGovern was suspended and the reason behind it.

ASIC is concerned McGovern and Madafferi could have breached the Corporations Act by misusing deposit funds of Dubber Corporation or one of its subsidiaries – purportedly held on trust by Madafferi. About A$26.6m ($17.3m) is unaccounted for.  

Travel restraint orders against Mansa Group directors – March 22, 2024

Travel restraint orders have been secured against Krishnakumar Sitaram Agrawal and Shashikumari Krishnakumar Agrawal – current and former directors within the Mansa Group. The orders, which both consented to, restrict the pair from leaving or attempting to leave Australia until August 31, 2024 or until further order is made.

ASIC is currently investigating Mr and Mrs Agrawal and the Mansa Group of companies after 16 of the 27 companies were placed into voluntary administration or liquidation between June 30 and August 4 last year.

Some 151 investors in Mansa Sons Pty Ltd, the Mansa Group treasury company, have reportedly lost almost A$34.5m ($22.5m) in the collapse.

Panacea Capital director permanently banned – March 21, 2024

Brian Jacques Creigh, director of Panacea Capital Pty Ltd, has been permanently banned from providing or being involved in a financial service business after being found to have operated an unlicensed crypto fund.

Creigh operated the Panacea Capital Cryptocurrency Investment Fund between April 2021 and June 2022, falsely claiming to hold an AFS licence.

He was found engaged in misleading or deceptive conduct by making multiple misleading statements of the fund, including that the fund had targeted returns of 120% to 150%. In the fact sheets, investors were told funds were transferred overseas and invested into a fund with the Liquid Assets Group – which was a scam – leading to investor losses of about A$7.7m ($5.1m).

ASIC found Creigh not a fit and proper person to engage in financial services after acting “dishonestly and with a lack of integrity, trustworthiness and judgment” when he:

  • operated the crypto fund unlicensed;
  • provided false evidence during an ASIC examination;
  • told investors not to cooperate with ASIC; and
  • created a fake Head of Client Services to communicate with investors.

He was also found to be not properly trained or competent as he failed to notice that he was dealing with scammers or dishonest people.

Third person pleads guilty in Courtenay House Ponzi scheme – March 20, 2024

David Sipina has pleaded guilty to two criminal charges relating to the Ponzi scheme within the Courtenay House group of companies, with:

  • one count of carrying on (with others) a financial services business without a license between June 24, 2015 to April 21, 2017 – contravening section 911A of the Corporations Act 2001 (Cth); and
  • one count of dealing in the proceeds of crime worth A$1m or more – contravening section 400.3(1) of the Criminal Code.

Allegedly, approximately 585 investors contributed over A$180m ($118m) to the scheme but only a fraction of the funds were actually traded. Most of the funds were used to repay earlier investors.

Sipina’s role in the business included referring new investors and marketing the business – yet it’s not alleged that he was aware the business was a Ponzi scheme. He did however plead guilty to handling money which he believed to be the proceeds of crime – in the form of commissions for promoting investments in Courtenay House despite it being unlicensed.

At the time of the offence, the maximum penalty for carrying on a financial services business without a license was two years’ imprisonment, a fine of A$34,000 ($22,204), or both. For dealing with/or believed proceeds of crime – the maximum penalty is 25 years imprisonment, a fine of A$204,000 ($133,244), or both.

Sentence for Sipina will fall later this year.

On May 8, 2023, Athan Papoulias – former company contractor, was sentenced to two years’ imprisonment, to be served by way of an intensive corrections order, and 120 hours of community service.

Tony Iervasi, former company director, has pleaded guilty to charges relating to operating the Ponzi scheme. Sentence is to follow later.

In May 2017, the Supreme Court of NSW made orders to wind up the Courtenay House companies. Interim orders against Tony Iervasi, Athan Papoulias, David Sipina, Courtenay House, Courtenay House Trading Group, and others prevented all from carrying on a financial services business and limited the extent to which they could deal with their cash and other assets. 

A$1.8m penalty for breaching continuous disclosure obligations – March 20, 2024

Holista Colltech Ltd has been ordered by the Federal Court to pay a A$1.8m ($1.17m) penalty for breaching its continuous disclosure obligations, and for making misleading statements regarding the sales of its sanitiser product Natshield.

On April 9, 2020, Holista announced to the ASX that Health Therapies LLC had placed additional orders for 415,000 bottles of NatShield – with expected revenue totalling A$3.8m ($2.5m). Yet the orders were not placed. Three months later, Holista announced that sales revenue had been scaled back to A$500,000 ($325,898).

The Federal Court found that CEO Dr Rajendran Marnickavasagar failed to discharge his duties with sufficient care and diligence by permitting the company to contravene its disclosure obligations and making misleading or deceptive representations – contravening section 180 of the Corporations Act.

He was also found making available or authorizing false or misleading information in three documents, and was ordered to pay a A$150,000 (97,777) penalty, plus disqualified from managing a corporation for four years.

He was also ordered to pay A$200,000 ($130,380) towards ASIC’s legal costs, and Holista contribution is to be agreed upon or taxed.

“Holista engaged in serious contraventions of the Corporations Act and made misleading claims to investors.”

Sarah Court, Deputy Chair, ASIC

Financial adviser and director permanently banned – March 20, 2024

The financial adviser and director Shane Allan Rose has been permanently banned from providing any financial services, performing any function within or controlling an entity in the financial service sector.

Between February 2021 and January 2023, Rose was found engaging in dishonest conduct when he, as an authorized representative and responsible manager of Octillion Partner Pty Ltd, recommended six self-managed superannuation fund that clients could invest their superannuation in. But he used the funds for other purposes.

Rose was also found to be not a fit and proper person to work within the financial services industry because “his dishonest actions showed serious incompetence and irresponsibility, and that he is likely to contravene financial services law in future”.

Data#3 announces restatement after ASIC’s review – March 20, 2024

After an ASIC review which raised concern, Data#3 Limited has now announced the restatement of its full-year 2023 and half-year 2022 financial reports.

In the review, ASIC found that the company subsequently changed its accounting policy to recognise revenue from contracts when selling some software products as an agent rather than a principal – where only net earnings on those sales are recognized as revenue.

The new restatement resulted in a A$1.67 billion ($1.09 billion) decrease to revenue for the year ended June 30, 2023 and a A$761m ($497m) decrease for the half year to December 31, 2022.

Actions against 15 SMSF auditors – March 14, 2024

ASIC has imposed conditions on 13 self-managed superannuation fund (SMSF) auditors after independence concerns where financial statements for clients were prepared by the same firm that also conducted the audit.

The conditions include restriction on performing in-house audits, requiring an independence review of all SMSF audit clients, and notification of the conditions to their professional association.

Two auditors have also accepted voluntary cancellations.

All the 15 SMSF auditors were referred to the Commission by the Australian Taxation Office after a review of audit firms, and one has applied to the Administrative Appeals Tribunal for review of ASIC’s decision to impose conditions.

Cancelled Australian Financial Services (AFS) licences

  • The AFS licence of Suetonius Wealth Management Pty Limited has been cancelled due to failings to lodge financial statements and audit reports for the financial years ending June 30, 2021 and 2022. It was first suspended to give the company an opportunity to provide the missing 2021 and 2022 documents. They company failed to provide them to ASIC, and the licence was cancelled altogether. As of February 29, the documents for 2023 were also missing.
  • The licence has also been cancelled for Endeavour Securities (Australia) Ltd because the company now is insolvent, under administration and is being wound up.

Court updates

Auto & General Insurance Company did not include an unfair contract term – March 22, 2024

The Federal Court has found that a term requiring policy holders to notify Auto & General Insurance Company Limited of any changes to their home and contents was not unfair under the ASIC Act, which ASIC alleged.

The Commission is considering the judgment. 

Former Company Secretary Flegg sentenced – March 19, 2024

Jane Rosemary Flegg, the former secretary of Continental Coal Company, pleaded guilty to three criminal charges in January, and has now been sentenced to three years, six months imprisonment with a non-parole period of 21 months.

She was also sentenced to a further eight months in prison for giving false information to the ASX, to commence at the expiration of her non-parole period, and must serve four months of this sentence prior to being released upon entering into a recognisance in the sum of A$1,000 ($652).

On January 17, Flegg pleaded guilty to:

  • stealing about A$2.2m ($1.4m) of applicant funds from a Citation bank account – breaching section 378 of the Criminal Code (WA);  
  • forging and uttering a Citation bank statement that falsely showed A$675,658 when in fact it only held A$117.55 ($446,191 – $78) – breaching 473(1) of the Criminal Code (WA); and
  • giving false or misleading information to the ASX, where Continental Coal failed to disclose its only income-generating asset had gone into administration and another statement that said that assets had been falsely sold – breaching 1308(2), 1309(1)(c), and 1311(1) of the Corporations Act 2001 (Cth).

Provide Capital appeal – March 18, 2024

The Full Federal Court has dismissed an appeal by Provide Nominees Pty Ltd. The company had been ordered by the Federal Court to produce documents to ASIC in October 2023.

ASIC previously served a notice on the company to produce documents, which it failed to do. 

Justices Lee, Anderson and McElwaine found that the previous orders by Justice O’Bryan in the Federal Court are correct, dismissed Provide Capital’s appeal, and ordered the company to pay for ASIC’s costs.

“The evidence before the Court demonstrates a history of delay and obfuscation on the part of Provide in complying with the Notice. The most egregious example is the redaction of documents produced to ASIC.”

  Justice O’Bryan

Finder Earn product not a financial product – March 14, 2024

The Federal Court has found that Finder Wallet Pty Ltd did not provide unlicensed financial services regarding its crypto-asset related product Finder Earn – which ASIC alleged was a debenture.

The Commission has 28 days to lodge any application for appeal to the Full Federal Court.

ASIC news weeks 11-12

Information on the Financial Accountability Regime

ASIC and the Australian Prudential Regulation Authority (APRA) have published new information to help prepare for the Financial Accountability Regime (FAR) – which came into effect for banks on March 15, 2024, and one year later for the insurance and superannuation sectors.

The FAR imposes a strengthened responsibility and accountability framework to bolster risk governance cultures of APRA-regulated entities, directors and most senior executives. The information package includes guidance materials on how to:

  • assist entities and accountable persons to comply with obligations under the FAR;
  • instructions to assist entities in reporting FAR breaches to APRA and ASIC; and
  • an updated accountability statement guide and template.

It also outlines steps that insurance and superannuation entities should take ahead of the FAR’s commencement in 2025, and proposed changes to the Regulator rules and draft key functions descriptions for insurance and superannuation entities.

Feedback on the insurance and superannuation parts can be submitted until April 19, 2024.

New legislative instrument

The new legislative instrument ASIC Corporations (Relief to Facilitate Admission of Exchange Traded Funds) Instrument 2024/147 for exchange traded funds has been released, and will replace [CO 13/721] ASIC Corporations (Relief to facilitate quotation of exchange traded funds on the AQUA Market) 13/721 ([CO 13/721]) which was set to end on April 1, 2024.


In a keynote speech by ASIC Chair Joe Longo at the Australian Institute of Company Directors’ Australian Governance Summit, Longo spoke about the difficulties directors experience, and said that the requirements have changed a lot over the years.

Now, he said, the role is probably more complex than ever with more challenges to follow, from geopolitics to generative AI and digitization to sustainability. However, it’s still not impossible to comply with its directors’ duties – and that the Commission expects directors to do it. “Being a director isn’t easy – if it were, anyone could do it.”

On Blockchain APAC’s Policy Week, Commissioner Alan Kirkland spoke about how the Commission seeks to promote the growth of responsible innovation in financial services by balancing by enabling innovation with consumer protection and market integrity.

“Our desired outcome is a clear set of rules that maintain market integrity and mitigate the risks to consumers and investors – backed by mechanisms that promote compliance with these rules and enable us to enforce them effectively.”

Scam alert

ASIC has sent out a warning alerting consumers that there’s an increase in imposter scam websites with fake warning banners that are impersonating real financial businesses. The Commission has also issued a list on how to check if a site is real of not.