The Federal Court found that Mayfair made false or misleading statements by representing that its products were comparable and of similar risk profile to bank term deposits, that principal investment would be repaid in full on maturity when investors might not receive capital payments on maturity – or at all – and that its debenture products were designed for investors seeking “certainty and confidence” when there was risk that they could lose some or all of their principal investment.
“ASIC’s success in Court today demonstrates firms need to do the right thing by their investors, even when they are wholesale investors. They need to make sure they accurately describe their products when advertising,” said ASIC deputy chair Karen Chester.
“The Court has shown that Mayfair 101 engaged in misleading and deceptive conduct by claiming its products were comparable to bank term deposits, when they were not.”
The court also found that the M Core Fixed Income Notes were not fully secured as funds invested could be lent to a related party, used to pay deposits on properties prior to any security interest being registered, and used to purchase assets that were not secured by first-ranking, unencumbered asset security.
ASIC is seeking pecuniary penalties. A penalty hearing is yet to be listed by the court.
