The Federal Court has ordered an unregistered managed investment scheme to be wound up and permanently banned one of its directors from carrying on a financial business, corporate watchdog ASIC reported.
Unlicensed financial advisor Monica Kaur and husband Sadu Singh operated an unregistered managed investment scheme without a licence or the required registration, when they urged around 300 investors to establish SMSFs and advised them to invest in property investments and developments via MKS Property Investments/Developments (MKS Property), between March 2017 and December 2020, the court found.
The pair were directors at various times of MKS Property.
The court also found that Singh failed to exercise his director’s duties with the degree of care and diligence that a reasonable person would exercise when he deferred all matters regarding the affairs of MKS Property to Kaur.
As a result of these breaches, the court ordered that Kaur be permanently restrained from carrying on a financial services business in Australia and be disqualified from managing corporations for life. Singh, too, has been banned from managing corporations, but only for 15 years.
The court action will also see MKS property wound up, with David Hodgson and Andrew Hewitt of Grant Thornton appointed as receivers of the property of Kaur, Singh, and the scheme and as liquidators of the scheme and MKS Property.
“The venture into which Ms Kaur directed investor funds was risky and speculative as is shown by the likelihood that most if not all of the funds of many of the investors have been lost,” said Justice Darren John Jackson, in handing down his decision.
“Inadequate record-keeping and a lack of controls over what was done with the funds are likely to exacerbate the losses and the difficulty of making any recovery on behalf of investors. The losses are going to be in the millions of dollars and are likely to impact on the retirement savings of many individuals.”
In December 2020, ASIC commenced action against Kaur and MKS Property where it obtained urgent asset and travel restraint orders against Kaur, MKS Property, Paradise Property Group, as well as against Singh, Melvin Paul Singh, and Stephanie Lee.
Tim Mullaly, ASIC executive director financial services enforcement, said the regulator “is actively engaging with industry and consumer advocacy groups to raise awareness about the risks associated with unlicensed advisors and providing guidance on identifying legitimate financial professionals.”
“ASIC is committed to safeguarding the interests of consumers and upholding the integrity of the financial services sector, sending a clear message that unlicensed practices will not be tolerated,” Mullaly said.
