THE Supreme Court of New South Wales has stopped the operators of an unregistered managed investment scheme linked to a Newcastle property development.
Following an application by the Australian Securities and Investments Commission, the Court made final orders and declarations by consent against Empower Invest Pty Ltd, Newcastle Palais Holdings Pty Ltd and their directors, Ken Watson and Brien Cornwell.
The order prevents the scheme from promoting or issuing further interests in the investment.
Cornwell is currently the sole director of Newcastle Palais Holdings Pty Ltd and a practicing solicitor in
ASIC alleges the companies and their directors promoted and operated a managed investment scheme in relation to a property development at
The scheme raised $688,500 from nine investors. ASIC’s investigation revealed that offers were made to approximately 35 potential investors to join the scheme.
The Court declared, with consent from the defendants in the proceedings, that the companies and the directors operated an unregistered managed investment scheme and carried on a financial services business in relation to the scheme in breach of the Corporations Act.
In addition to the consent declarations and consent orders made by the Court, the defendants offered an enforceable undertaking to ASIC in which they undertake to:
• inform investors in the scheme of ASIC’s concerns;
• offer to refund money invested;
• make a refund to any investor who accepts the offer; and
• report to ASIC on any refunds requested and paid to investors.
ASIC’s executive director of Enforcement Jan Redfern said the law requires that managed investment schemes be registered so as to protect the interests of investors.
“People seeking to raise funds for development projects need to be aware of the managed investment scheme provisions. These provisions ensure that appropriate levels of disclosure, reporting and compliance procedures are in place for the benefit of investors.
“In this case, ASIC identified an offer to raise funds early and acted to ensure that no further investors joined the scheme and that existing investors were able to exit the fund,” she concluded.
Australian Property Journal
