Why did ASIC ignore complaints about $180m Ponzi scheme?
ASIC has been rapped for its slowness in investigating tip-offs about potential Ponzi schemes, in some cases waiting years to follow up complaints.
Appearing before the Senate Economics Reference Committee’s inquiry into ASIC, Susan Barnett, managing director of SR Group, explained how individuals had warned the regulator about Courtenay House years before formal steps were taken.
The Courtenay House companies had represented to investors that their funds would be traded in the forex and futures markets when only a small proportion of funds were traded. Instead, monthly amounts were paid to investors from the capital invested by other investors in a $180 million Ponzi scheme.
In May 2023, former contractor and promoter of Courtenay House, Athan Papoulias, was sentenced to two years’ imprisonment for his role. In February 2023, David Sipina was charged with criminal offences related to alleged misconduct at the company, and director Tony Iervasi pled guilty to five criminal charges in November 2022.
During the evidence, Barnett described how victims’ concerns had been ignored by the regulator. The first warning about Courtenay House was issued in 2012, and further 10 were made before the first regulatory action was taken by ASIC in 2016.
Barnett said the complainants received no phone call, no meetings or interview requests, and only received an automated reply from ASIC which stated it “will look into it”.
“[ASIC] have become so large, so unwieldy, they spend a lot of money looking after ant nests. They don’t do anything. When they do actually take affirmative action, it then becomes catastrophic for so many more people. I think the enforcement area of the regulator should be separated. They should not co-exist.
“There is no cohesion with ASIC’s capacity to monitor accurately complaints as they come in and see whether they are valid or not. There might be a lot of complaints but if you get 10 about one company, then it warrants an investigation.”
She said the ability of multiple Ponzi schemes to exist in Australia was “damning”. As well as the Courtenay House scheme, other Ponzi schemes include one run by Melissa Caddick, City Pacific, and Prime Trust.
“It should make ASIC sit up and say, ‘What is wrong with what we are doing as a regulator that these Ponzi schemes can happen in the hundreds of millions of dollars?’”
AUTHOR
Laura Dew
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ASIC asleep at the wheel for many massive financial crimes.
ASIC warned so many times about Storm, Dixon’s, Big Bank FFNS, etc and do nothing until it’s too late.
ASIC to busy Killing Real Advisers for minor over cooked Regulatory admin breaches to have any time to fight real financial crimes.
ASIC are so terribly misguided and corrupt.
Lets be honest, ASIC are incompetent & corrupt bureaucrats intent only in building their own empires.
ASIC focus is on the insignificant and weak. Hence their vengeance when going after an advisor for minor infractions.
They avoid the big tasks that are difficult constantly.
If it doesn't involve financial services and lording big penalties and disproportionate compensation then they are in hiding.
When an outfit starts promoting climate change and culture as the RBA have and ASIC you know you have problems. They find their core mandate too dull or too hard.
None of this will be helped by the new band of commissioner appointments.
When it comes to ASIC what's new? They should have a name change to Amateurs Sitting In Comfort, because they are anything but professional.
According to respected economist Mr.John Adams, his research reported that out of 10,000 ASIC complaints registered each year for the last 10 years only 1.27% have been investigated.
I invested my Super into an Australian Share Fund, with one of Australia's largest Investment Institutions with my portfolio to be managed by their highly acclaimed Professional Fund Managers. Over a 16 month period, the then share market ( ASX ) fell 23 points (0.5%). However my balance sustained a loss of over 20%, and yet on their official web site it shows that the unit price increased from 0.5537 to 0.5583, so how is such a result possible?
No financial expert on this planet can explain how such an inexplicable result is possible; it took over 3 months and many phone calls just to get ASIC to confirm they had received my application. ASIC's final response to me was that they see no need for an investigation, and regardless of what ever new evidence I can provide they will not respond to any more of my submissions. Sadly, I am just one of those 10,000 untold stories each year testifying to ASIC's failure to act as a responsible regulator.
Their cavalier dismissal of the concerns of an ordinary investor is a very troubling example of failure of public administration and regulation in Australia, particularly from a publicly - funded organisation with over 2,000 employees.
This latest debacle of how ASIC handled the Courtenay House issue, is just the beginning of many more future examples of ASIC's failures to regulate.