ASIC has obtained declarations against an asset manager after the Queensland Supreme Court found the company’s bank accounts showed $1 million in “suspicious transactions”.
The Queensland Supreme Court made declarations that Goldsky Global Access Fund, Goldsky Asset Management Australia and Goldsky Investments, companies which Kenneth Charles Grace is the sole director and a shareholder of, have breached the Corporations Act by operating a financial services business without an Australian Financial Services Licence.
ASIC had earlier obtained orders placing the Goldsky entities into liquidation and freezing the assets of Mr Grace, after suspecting he used new investor funds to make payments to previous investors, which Mr Grace represented were returns, in a ponzi scheme arrangement.
Following an ASIC investigation, the court found that the companies carried on a financial services business without holding an Australian Financial Services Licence.
Although Mr Grace claimed to operate in the US, he resided in Tweed Heads, NSW. Investors included those from Mr Grace’s local area as well as high-profile cyclists and AFL current and former players.
The court accepted that the companies’ bank accounts showed approximately $1 million in suspicious transactions, where funds appeared to have been used for personal purposes. The court appointed receiver noted that the estimated shortfall of investor funds is $12,547,904.
“ASIC has pursued this case to ensure the investments were halted, so that further investors were not harmed. ASIC’s investigations into Mr Grace and the Goldsky entities are ongoing,” ASIC commissioner Sean Hughes said.
Chris Baskerville from Jirsch Sutherland has been appointed as liquidator of the Goldsky entities.
Kenneth Grace, via Goldsky Asset Management LCC, a US-based company, commenced operating a financial services business in Australia in March 2017. Goldsky Asset Management LCC purported to rely on an exemption to hold an Australian Financial Services licence due to an ‘investment adviser’ authority which he had obtained from the United States Security and Exchange Commission (SEC).
On 2 January 2019, the SEC obtained judgment against Goldsky Asset Management LLC and Kenneth Grace for making false and misleading statements about its business. Goldsky and Mr Grace were ordered to pay penalties totaling US$75,000.