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ASIC, Superannuation

ASIC takes action over unlicensed SMSF scheme

ASIC unlicensed scheme

ASIC has taken action against a former Melbourne adviser over an unlicensed investment scheme that used SMSFs to secure funds.

The Australian Securities and Investments Commission (ASIC) has taken civil action against a former financial adviser for running an unlicensed managed investment scheme that recommended clients move funds from their superannuation into SMSFs.

The corporate regulator commenced civil proceedings against Melbourne-based Mustafa Mohammed, as well as Mahek Mustafa, Mubashir Mohammed, MyWealth Manager Financial Services Pty Ltd, MyWealth Protection Pty Ltd, 3M Financial Planning Pty Ltd and Secure Investments Pty Ltd, for operating the unregistered scheme from February 2017 without an Australian financial services (AFS) licence.

“ASIC is seeking declarations from the Federal Court that the defendants have contravened the Corporations Act by operating an unregistered managed investment scheme called MyWealth Manager,” ASIC stated.

“ASIC alleges the scheme should have been registered and that the defendants operated the scheme without holding an AFS licence.”

According to the regulator, Mustafa Mohammad targeted consumers from certain ethnic and cultural backgrounds, and the scheme raised $7 million from over 55 investors who were encouraged to roll their superannuation into newly established SMSFs in order to invest their super in MyWealth Manager in the form of a loan from the SMSF.

“ASIC also alleges that the defendants used investor funds for their own personal use, including substantial payments to friends and family members and the promotion of cryptocurrency,” it said.

ASIC obtained interim orders in relation to the defendants on 21 November, including orders to restrain the defendants from:

  • operating a financial services business without an AFS licence,
  • managing, directing, controlling or otherwise operating the unregistered scheme, and
  • receiving, soliciting, transferring or disposing of investor funds received in connection with the unregistered scheme.

Mustafa Mohammed was an authorised representative of AMP from October 2013 to March 2017 and, according to the ASIC Financial Advisers Register (FAR), has not been authorised to provide advice since 7 March 2017. The FAR also records Mahek Mustafa and Mubashir Mohammed as having ceased being authorised representatives from 30 June 2019.

The hearing has been adjourned to a date to be fixed after 5 December 2019.

ASIC’s investigation is continuing and is part of its wealth management major financial institutions portfolio focused on the financial services conduct of Australia’s largest financial institutions in the areas of financial advice, fees for no service, superannuation trustees, other licensee obligations and conduct arising from the financial services royal commission.

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