The Federal Court has banned James Mawhinney, the director of funds management company Mayfair 101, from promoting financial products or raising funds through them for 20 years as a result of an Australian Securities and Investments Commission (ASIC) proceeding brought against him in August last year.
In handing down the sentence, Justice Anderson noted Mawhinney had shown no contrition or remorse for investors’ funds lost through allocations to Mayfair 101 and concluded there was a high likelihood he, or the entities controlled by him, would engage in similar conduct if the court did not prevent it from happening.
Financial products such as M Core Fixed Income Notes (Core Notes), M+ Fixed Income Notes (M+ Notes), the IPO Wealth Fund, Australian Property Bonds and IPO Capital were offered to investors as part of the Mayfair 101 Group. Around $211 million is currently owed to individuals who invested in the organisation. Certain entities in the group are already in liquidation.
Justice Anderson described Mawhinney’s behaviour as “reprehensible conduct which demonstrates a complete disregard for financial services laws and, as a consequence, places the public at great risk of financial loss should Mr Mawhinney not be restrained by the form of injunction sought by ASIC”.
He was particularly critical of Mayfair Wealth Partners’ actions in procuring a $100,000 investment in Australian Property Bonds without issuing the investor with the product or contacting them.
“Such conduct is reprehensible. No competent, fair or reasonable financial services provider takes money from an investor without having proper administrative procedures in place to ensure the relevant product is issued to the relevant investor,” he said.
The ban means Mawhinney will not be able to advertise or raise any additional funds through either the existing Mayfair 101 products or any other new financial products in future.
He was also restrained from removing from Australia any assets acquired with funds received from the public for investments in financial products for 20 years, without a court order.
Further, he was ordered to pay for the costs ASIC incurred as a result of its application for the injunction.
“This action is one of several under ASIC’s ‘True to Label’ project targeting investment managers and issuers of other financial products who have lured unsophisticated investors into high-risk products via misleading marketing,” ASIC deputy chair Karen Chester said.
“This case demonstrates that ASIC’s true-to-label expectations are enforceable. It also demonstrates ASIC is both willing and able to take action not only against the companies involved but also their senior executives.
“In Justice Anderson’s decision, we hear loud and clear the voices of eight Australian investors who’ve lost hundreds of thousands of hard-earned savings. The average age of those eight voices is a retirement age of 67 years, beginning with the voice of one young 29-year-old investor through to the voice of an 84-year-old gentleman.
“Banning Mr Mawhinney from offering financial products for two decades matters for the many other investors that Mr Mawhinney may otherwise have lured into these risky investment products.”
ASIC is continuing its investigation into Mawhinney’s conduct.
