The Federal Court has ordered the Australian Securities and Investments Commission (ASIC) to pay the legal costs of James Mawhinney after the corporate regulator failed to make a new case against the Mayfair 101 managing director.
Mr Mawhinney originally received a 20-year ban from promoting and raising funds through financial products in April 2021 following proceedings brought by ASIC in August 2020.
However, this decision was overturned on appeal by unanimous decision of the full bench in September 2022, which ordered the case be remitted to a new Federal Court judge.
ASIC subsequently issued an amended concise statement to initiate the remitter trial and introduced fresh claims, including seeking to ban Mr Mawhinney as a company director and pecuniary penalties which were not previously sought.
The regulator’s attempt to change its original case was rejected last month by the Federal Court’s Justice O’Callaghan, who found that the matter remitted related only to the question of whether a ban from dealing in financial products should be imposed.
ASIC is now required to pay Mr Mawhinney’s costs of his successful application to confine the remitted case.
Mayfair 101 said in a statement on Monday, “570 Australian lenders have been without principal and interest payments on their debt instruments after ASIC first targeted the group in early 2020”.
“At the time, Mayfair 101 held over half a billion dollars’ worth of assets including over 130 investment properties in Australia, principal and interest obligations were current, and no Mayfair 101 client had made a complaint to ASIC.
“The recent court win for Mr Mawhinney is a significant step forward in his goal of ensuring all Mayfair 101 clients are made whole.”
“ASIC pursued this case through the Federal Court because of the importance of accurate advertising of financial products,” ASIC deputy chair Sarah Court said at the time.
“We were concerned that the advertising by the Mayfair 101 Group represented that their products were of a similar risk profile to bank term deposits, when that was not the case.
“The decision to uphold the original findings of the Federal Court, and ASIC’s case that the Mayfair 101 Group’s advertising was misleading or deceptive, is a message to industry that financial products need to be accurately advertised or companies may risk substantial penalties.”
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.