ASIC commences proceedings against Mayfair
The Australian Securities and Investments Commission has commenced proceedings in the Federal Court of Australia against Mayfair 101 and Mayfair Platinum for misleading or deceptive advertising.
It had promoted two debenture products to wholesale investors: M Plus Fixed Income Notes, which were unsecured promissory notes issued by M101 Holdings; and M Core Fixed Income Notes, which were secured promissory notes.
Mayfair used sponsored link internet advertising through Google AdWords and Bing Ads, so the websites appeared as sponsored links when consumers searched for ‘bank term deposit’ or ‘term deposit’.
Other promotional material also used key words and phrases such as term deposit alternative, term investment, fixed term, certainty, confidence and capital growth.
ASIC alleged Mayfair made statements that were false, misleading or deceptive by representing that:
- Mayfair debenture products are comparable to bank term deposits and have a similar risk profile when they are much riskier;
- The principal investment would be repaid in full on maturity, when investors may not receive capital repayments on maturity or at all because Mayfair could elect to extend the time for repayment for an indefinite period;
- The products were specifically designed for people seeking safe investments, when these carried significant risk; and
- The products provided capital growth opportunities when they do not.
ASIC sought injunctions to restrain the publication of statements like this and pecuniary penalties in relation to the alleged false or misleading representations.
On 11 March, 2020, Mayfair Platinum suspended payment of capital redemptions to investors in the Mayfair debenture products due to liquidity issues.
ASIC also sought an interim injunction to stop the defendants from promoting and issuing the Mayfair debenture products while redemptions to existing investors remain suspended.
The injunction would be heard by the Federal Court on 14 April 2020 at 9.30am.
Recommended for you
Outflows from an Australian private markets fund manager have caused FUM at Pacific Current to decline by $1 billion in the last quarter.
Former RIAA chief executive Simon O’Connor has joined the ethical advisory panel at U Ethical Investors.
Financial services leaders are “all cashed up with nowhere to grow” when it comes to M&A activity, according to Deloitte, with 90 per cent saying they have strong balance sheets ready for an acquisition.
As fund managers are urged to diversify their product ranges, they are finding a faster way to do this is via an acquisition of existing firms but experts say it is not without potential culture clashes.