The High Court has ruled in favour of ASIC in its case against the former CEO and executive director of MFS Ltd.
The High Court found that Michael Christodoulou King was an officer of MFS Investment Management (MFSIM) Pty Ltd, a subsidiary of MFS Ltd (also known as Octaviar Ltd). MFSIM acted as a responsible entity for several registered managed investment schemes, the largest of which was the Premium Income Fund (PIF)
The court held that Mr King was an “officer” because the provision is not limited to those who hold or occupy a named office in a corporation or a recognised position with rights and duties attached to it.
“The factual findings of the primary judge that Mr King acted as the “overall boss of the MFS Group” and assumed “overall responsibility for MFSIM” were sufficient to establish that Mr King had the capacity to affect significantly the financial standing of MFSIM,” ASIC said in a release.
ASIC’s appeal arose from civil penalty proceedings commenced by ASIC against officers and a fund manager of MFSIM in connection with the misappropriation of $147.5 million held by the PIF on behalf of unit holders.
“ASIC notes today's High Court decision, which sends a clear signal to anyone running a company – in name or in effect – that they should be responsible and held accountable for their actions,” ASIC Commissioner John Price said.
“It provides clear guidance on who is an "officer" of a corporation and establishes that the duties and responsibilities to a company, its creditors and shareholders under the Act will apply to individuals who have the capacity to significantly affect the financial standing of a company.”
MFSIM is not associated with MFS Investment Management, a Boston-based global investment firm.
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