The SMSF that initiated a class action against Dixon Advisory and Superannuation Services (DASS) for losses allegedly stemming from poor financial advice has made an application to freeze the $7.2 million penalty imposed by the Australian Securities and Investments Commission (ASIC) for Corporations Act breaches.
Kosen-rufu Pty Ltd’s attempt to ring fence the amount is reliant on section 1317QF of the Corporations Act, which directs the courts to prioritise compensation to victims of misconduct over any civil penalty should there be a possibility the wrongdoer may not have sufficient funds to satisfy both financial liabilities.
As part of the move, the SMSF obtained leave to be heard at a penalty hearing scheduled for today to benefit all parties involved with the class action against DASS.
However, the application to freeze the penalty was deferred for determination at a later date after ASIC requested it be granted additional time to consider its position on the matter.
Piper Alderman, the legal firm that filed the class action on behalf of Kosen-rufu, expressed its disappointment at the day’s developments.
“The applicants are disappointed that the hearing of this important application did not proceed today. The intent of the provision is to ensure that facilitating compensation for victims is given preference over the payment of penalties if there is a risk that a defendant cannot do both,” Piper Alderman partner Martin del Gallego said.
“We will continue to work with ASIC and DASS to favourably resolve the application as quickly as possible and set aside the funds for possible distribution to participants in its class action at a later date.”
The class action against DASS, E&P Financial Group (the owner of DASS) and its former chief executive, Alan Dixon, was filed earlier this month.
DASS in July agreed to pay a penalty of $7.2 million imposed on it by ASIC for providing conflicted financial advice and engaging in misleading and deceptive conduct. Further, the financial services firm had also stipulated it will pay ASIC $1 million for legal and investigative expenses incurred.