The Australian Securities and Investments Commission is appealing the Federal Court of Australia decision in a civil penalty proceeding, prosecuted by ASIC, against former directors of Australian Managed Funds Limited.
ASIC had sought significant pecuniary penalties against Messrs Peter Cornelius Beekink, Gregory Phillip Gaunt, and Hersch Solomon Majteles as well as an order disqualifying Beekink from the management of companies for a period to be determined by the Court.
On April 7, 2006, Beekink was fined $25,000 and Messrs Gaunt and Majteles $10,000 each, however, the Court declined to make a disqualification order against Beekink.
This decision followed findings by the Court that the defendants had failed to ensure that statements made in a second part prospectus issued by AMF to raise funds for the construction of the Blackrock Caravan Park in South Hedland, Western Australia, were not misleading.
ASIC will argue in the appeal that the Court should have made an order against Beekink disqualifying him from the management of companies and that the pecuniary penalties imposed by the Court on all three defendants were inadequate.
By Kathryn O’Meara
Background
ASIC alleged the materially misleading information in the prospectus included that:
• At January 31, 2000, $2.2 million had been raised and that a further $320,000, proposed to be raised under the prospectus, would enable the borrowers to complete the project, and
• Work was nearing the final stages and the caravan park should be open by the end of February 2000.
Contrary to these statements, construction of the caravan park was in fact not nearing the final stages. There was also evidence that approximately $1,600,000 was required at the time that the prospectus was circulated to clients of Clifton Partners Finance Pty Ltd (Clifton Partners).
At the relevant time, Messrs Beekink, Gaunt, and Majteles, were all partners of the law firm Phillips Fox.
Beekink and Phillips Fox agreed to repay (in equal instalments) the capital losses suffered by investors in the Blackrock Caravan Park project. This amount totalled $207,040.
