ASIC roundup: Banned directors, scam alert, and disclosure failures

The Australian Securities & Investments Commission’s latest actions and news, April 29 – May 3, 2024.

Directors disqualified from managing businesses – 2024

During the first three months of 2024, ASIC disqualified four directors from managing corporations over failures regarding the management of small proprietary companies. The banned directors were found to have left many creditors unpaid, some were also involved in illegal phoenix activity and also used company funds to pay related parties for no commercial reason.

Rukshan (Rick) Wickramanayake – a textiles industry director. He was disqualified for one year over his involvement in the failure of three small proprietary companies, which owed a combined total of A$1,487,009.18 ($983,370) to unsecured creditors.

Shane Dunstan – an engineering and mining services director. He was disqualified for two years over his involvement in the failure of four small proprietary companies, which owed a combined total of $4,885,034 ($3,230,976) to over 50 unsecured creditors, including the tax office; A$52,043 (34,440) for unpaid wages and employee leave entitlements; and A$23,173 ($15,335) to Fair Entitlements Guarantee for payments to former employees.

Alaa El Hassan – has been disqualified for five years regarding the failure of seven small proprietary companies which owed a combined total of A$3,723,402.16 ($2,464,163) to unsecured creditors including the tax office; A$547,346 (362,236) to Revenue NSW and A$23,246 ($15,384) to former employees.

Dane Stojic – a construction industry director, was disqualified for four years regarding the failure of eight small proprietary companies, which owed a combined total of A$33,357,590.28 ($22,075,017) to unsecured creditors, including A$13,768,044.14 ($9,111,264) to the tax office; A$1,315,512.69 ($870,565) to the Workers Compensation Nominal Insurer; and A$1,794,824.30 ($1,187,701) to the Office of State Revenue.

Magnis and Frank Poullas sued over disclosure failures – April 30, 2024

Civil penalty proceedings have begun against Magnis Energy Technologies Limited over alleged failings to disclose material information about its “flagship” lithium-ion battery manufacturing facility.

Frank Poullas, the company’s executive chairman, has also been sued for being involved in the alleged failures, and for allegedly breaching his director’s duties when not ensuring Magnis met its disclosure obligations.

Allegedly, Magnis – even though aware that claims weren’t holding up – still made incorrect statements about the iM3NY battery plant’s funding, automation of battery cell production and its ability to produce cells.

By failing to disclose information about the “true situation”, ASIC alleges that Magnis and Poullas engaged in conduct that was or was likely to be misleading or deceptive. Including leaving shareholders and the market more uninformed.

With the proceedings, ASIC seeks declarations and pecuniary penalties against both Magnis and Poullas, plus an order to disqualify Poullas from managing corporations.

Court updates

First win on non-cash payment facility involving crypto – May 3, 2024

BPS Financial Pty Ltd has been found engaging in unlicensed conduct during its offering of the ‘Qoin Wallet’ – a non-cash payment facility which used the crypto-asset token ‘Qoin.’  

The Federal Court found that the company contravened the Corporations Act for not holding an AFS licence, nor was it authorized by a licence holder when issuing or providing financial advice about the Qoin Wallet.  

It was also found engaged in misleading or deceptive conduct by making false or misleading statements about the product, such as untrue legal approval and false usage of the token.

Up to September 30, 2022, the Qoin Wallet was issued more than 93,000 times and BPS received over A$40m ($26.5m) from selling Qoin Tokens. Penalties are set to be announced on a later date.

“Crypto assets are highly volatile, inherently risky, and complex. This makes it critically important that providers have the appropriate licences and authorizations.”

Joe Longo, Chair, ASIC

Heng sentenced for failing to disclose interests – May 3, 2024

Henry Eng Chye Heng, founder of listed bottled water producer Eneco Refresh, has been sentenced to a recognizance release order to be of good behavior for 12 months upon providing security of A$10,000 ($6,580).

He pleaded guilty and was convicted of nine counts of failing as a director to notify the market operator of a change in his relevant interests – breaching section 205G(10) of the Corporations Act.

He was found using share trading accounts held in his family’s names to make trades on nine times in Eneco – and failed to notify the ASX of his interests as a director in those securities.

Heng was earlier in April sentenced to 18 months’ imprisonment for market manipulation and for creating a false or misleading appearance of active trading.

Odyssey sentenced for failing to lodge financial reports – May 1, 2024

Odyssey Equity Finance Pty Ltd has been sentenced for failing to lodge financial reports with ASIC for the financial years ending June 30 2020, 2021 and 2022.

As an Australian financial services licensee, the company was charged with:

  • three counts of breaching s989B of the Corporations Act for not lodging a profit and loss statement and balance sheet; and
  • three counts of breaching s989C for not lodging an auditor’s report with the profit and loss statement and balance sheet.

The company pleaded guilty in March, and was later discharged without conviction upon entering into a recognizance to be of good behavior for 12 months and giving security by A$2,500 ($1,645).

It is also required to comply with outstanding reporting obligations within that period.

ASIC news week 18


In a keynote speech at the RIAA Conference Australia on May 2, ASIC Chair Joe Longo spoke about greenwashing and the authority’s approach on how to address current issues.

Longo said that while shifting to “sustainable finance may constitute a once-in-a-generation transformation”, the “fundamental underlying principles of accuracy and transparency are not new.”

To date, ASIC has issued 17 infringement notices around greenwashing, totalling over A$230,000 ($151,739). The Commission also won its first greenwashing civil penalty action against Vanguard Investments, and has two other civil penalty proceedings underway.

On April 30, ASIC Chair Joe Longo made an opening statement before the Parliamentary Joint Committee on Corporations and Financial Services, where he addressed the earlier announced leadership changes as well as the Commission’s continuing enforcement approach.

“ASIC is on a journey of growth and transformation. We continue to focus on ensuring we have the right people and structure in place to meet the challenges and opportunities that rapidly evolving national and global markets present,” Longo said.

“The changes we are making are already yielding results,” he continued, and gave examples such as improvements in timeliness and efficiency in investigations.

In the last financial year, ASIC’s work resulted in:

  • 32 individuals charged by the Commonwealth Director of Public Prosecution in criminal proceedings, and 35 criminal convictions;
  • 26 civil proceedings resulting in over A$185m ($122m) in civil penalties;
  • 77 individuals and companies removed or restricted from providing financial services;
  • 28 removed or restricted from providing credit; and
  • 32 individuals disqualified from directing companies.

Scam alert

Due to increasing and more sophisticated scams, ASIC has set out a check list to help consumers identity scams that details what to look out for, and common signs of fake bonds and term-deposit scams.

The warning includes scammers mirroring real businesses’ disclosure documents, addresses, International Securities Identification Numbers, Australian business numbers and financial services license numbers.

Summary from First Nations consumers experiencing workshop

A summary document identifying and supporting First Nations consumers experiencing financial abuse has been published, following a workshop in March.

The workshop showed the unique cultural circumstances and experiences of First Nations consumers, and highlighted where improvements can be made to ensure that affected consumers are appropriately and sensitively supported.

The next workshop will be hosted in June, and focuses on best practice engagement for First Nations consumers and communities.

Improving superannuation death benefit claims

ASIC has set out to improve superannuation member services regarding death benefit claims, and is reviewing industry practices and compliance with laws regarding superannuation member services.

The findings during the first phase reveal areas for improvement in trustees’ public communications. And with complaints on the rise, ASIC is now calling on trustees to “urgently consider whether their arrangements for dealing with death benefit claims are fit for purpose.”

For the upcoming second phase of investigating death benefit claims, ASIC will look at relevant data and processes of trustees in detail.