Melbourne-based fund manager AD Capital has terminated its plans to merge with Linchpin Capital following court proceedings brought against the would-be partner by ASIC.
AD Capital Group has terminated its share sale agreement with Linchpin Capital Group, which was first reported by InvestorDaily on 14 June.
Linchpin Capital is the Peter Daly-run parent company of financial advice licensees Beacon Group, Libertas and Risk and Investment Advisors Australia (RIAA). Linchpin also owns assets in the mining and energy sectors.
In a statement to InvestorDaily, AD Capital said its decision to terminate the agreement with Linchpin was made “immediately after AD Capital became aware of the pending ASIC proceedings involving Linchpin and its related entities and officers concerning suspected breaches of the Corporations Act 2001”.
In the statement, AD Capital said it was not aware of the ASIC investigation into Linchpin until details of it were published on the ASIC website on 2 July 2018.
AD Capital chairman John Darling said: “Whilst this is a very disappointing outcome we remain optimistic as AD Capital will continue to identify and pursue suitable opportunities to maximise returns for its investors.”
ASIC announced on 2 July that it had commenced action against Linchpin in the Federal Court in Brisbane.
The proceedings relate to Linchpin and its subsidiary Endeavour Securities, which ASIC alleges operate a managed investment scheme – namely the ‘Investport Income Opportunity Fund’ – without holding a licence.
ASIC has also alleged that Linchpin used investor funds for its own purposes without disclosing that use to investors.
The corporate regulator obtained court orders against Linchpin on 30 July, restraining the firm from promoting or carrying on any financial services business in Australia, providing financial services advice, or dealing in and promoting financial products.
In an email to Linchpin’s staff and adviser network, Beacon Group managing director Peter Daly said there would be no adverse impact for the company’s financial advice subsidiaries.
“Whilst some restraints are in place, these only relate to Linchpin and Endeavour,” Mr Daly wrote in the email.
“It is business as usual for the other entities within the group, specifically Beacon and our licences. In fact, the court and ASIC made clear during the hearing on 24 July that they were not seeking any relief as against those other entities.”
The Federal Court in Brisbane continues to hear the matter.
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