The Federal Court has shut down two related unlicensed financial services businesses that purported to use SMSFs to engage in property development and are alleged to have moved $2.4 million of investors’ funds into accounts held by people associated with the firms.
ASIC stated the court had ordered the winding up of Secure Investments and that it and Mudasir Naseeruddin had breached the Corporations Act by operating a financial services business without holding an Australian financial services licence (AFSL).
The regulator claims Naseeruddin encouraged investors to roll over their superannuation accounts into SMSFs set up by an associate of Naseeruddin, and also alleges investor funds were transferred via a cash management account to Secure Investments and significant amounts of the funds were further transferred into accounts held by Naseeruddin and other related entities.
ASIC alleged the transfers had no identifiable corporate purpose and the funds had not been repaid to the investors from 28 SMSFs from which the funds were drawn during a period from early 2017 to late 2019.
In handing down the order, Justice Derrington said Secure Investments was carrying on a financial services business by repeatedly issuing financial products to investors to derive income, despite the fact it was not licensed to do so.
ASIC added that when separate action had been taken against Secure Investments in November 2019, Naseeruddin used Aquila Group to raise a further $250,000 from investors, which the court noted was used in a similar manner to those funds raised by Secure Investments.
“The financial management of Aquila Group under the control of Mr Naseeruddin replicated that of his erstwhile stewardship of the affairs of Secure Investments,” it said.
“That is to say that, whilst Mr Naseeruddin and Aquila Group received funds from investors for investing in building developments, those investments did not materialise. The funds were used for other purposes and dispersed without any proper recording of the transactions which justified such payments.”
ASIC’s investigation into the matter is continuing and follows previous action taken in May in which it sought court action to freeze the assets of Secure Investments and Aquila Group.
At that time, ASIC stated the two businesses were advising investors to roll their superannuation into a new SMSF and invest those funds in the business by way of a loan and were told they were investing in property.
In related news, the Federal Court has also frozen the funds, suspended the websites and restrained the owner of two unlicensed business that offered financial advice on a range of matters, including SMSFs.
ASIC stated it had applied for orders restraining Matthew Alan Beresford from carrying on a financial services business and suspending the websites of Maxwell Financial Services and Asset Capital Holdings.
The orders were granted by the court, which also froze all bank accounts associated with the two firms and has restrained Beresford from travelling outside of Australia.
ASIC alleged Maxwell Financial Services was created in late 2019 to offer financial services and its website stated the firm’s representatives held an AFSL, and these representations were false.
The regulator also alleged Asset Capital Holdings was established by Beresford in September 2020 and also offered financial services without holding the necessary AFSL.
It added Beresford had been arrested and charged and its action did not relate to two companies with similar names – Maxwell Financial Services Pty Ltd, which holds an Australian credit licence, or Asset Capital Holdings Pty Ltd.
