The Australian Securities and Investments Commission has obtained a ban for Mayfair 101 director James Mawhinney for 20 years for fundraising and promoting investment products. The court has restricted Mawhinney from promoting and raising funds through financial products following proceedings brought by ASIC on 7 August 2020.
The Mayfair 101 Group offered investments in financial products such as M Core Fixed Income Notes (Core Notes), M+ Fixed Income Notes (M+ Notes), the IPO Wealth Fund, Australian Property Bonds and IPO Capital. The companies that offered the Core Notes and the IPO Wealth Fund are in liquidation at present and redemptions in the remaining products have been suspended since March 2020. Mayfair 101 Group collected $211 million from its investors.
The court found that Mawhinney has been ‘involved in multiple contraventions’. Mawhinney’s conduct was described as ‘serious, incompetent and reckless and displaying a propensity for conduct in disregard of the requirements of financial services laws.’
The court believes it likely that Mawhinney, or entities controlled by him, will engage in similar conduct if not prevented.
The court said:
Mr Mawhinney’s conduct can accurately be described as reprehensible conduct which demonstrates a complete disregard for financial services laws and, as a consequence, places the public at great risk of financial loss should Mr Mawhinney not be restrained by the form of injunction sought by ASIC.
Mawhinney was found to have engaged in conduct that entailed ‘inherently problematic, risky and fatally flawed’ investment schemes in relation to the IPO Capital, Core Notes, M+ Notes and IPO Wealth Fund products. The court also noted that Mawhinney ‘has expressed no contrition or remorse for the very significant loss of investors’ funds’.
Mayfair Wealth Partners, which promoted the Australian Property Bonds, also took $100,000 without issuing the investor with the product or contacting the investor.
The court noted:
Such conduct is reprehensible. No competent, fair or reasonable financial services provider takes money from an investor without having proper administrative procedures in place to ensure the relevant product is issued to the relevant investor.
The court banned Mawhinney from advertising investments and seeking or accepting funds in connection with any financial product, for 20 years. He is restrained from advertising and raising further funds through both the existing Mayfair 101 products as well as any new financial products in future.
The Court also prevented Mawhinney from removing from Australia any assets acquired with funds received for investments in financial products for 20 years, without a court order.
The ban follows the 23 March 2021 decision of the Federal Court that found that companies in the Mayfair 101 Group made false, misleading or deceptive statements in advertisements for its debenture products. A penalty hearing for that proceeding was set for 20 July 2021.
ASIC Deputy Chair Karen Chester commented:
Karen Chester Source: LinkedIn
These are large investor losses, approximately $211 million, on the back of multiple product failures across the Mayfair 101 Group. This action is one of several under ASIC’s ‘True to Label’ project targeting investment managers and issuers of other financial products who have lured unsophisticated investors into high risk products via misleading marketing.
Karen Cheste continued:
This case demonstrates that ASIC’s true to label expectations are enforceable. It also demonstrates ASIC is both willing and able to take action not only against the companies involved but also their senior executives. Justice Anderson’s decision makes clear why ASIC brought this action and that the business models for these products were flawed from the outset. The responsibility for the losses and the egregious harm to investors is, as the judgment makes clear, all down to the contumelious actions of Mr Mawhinney.
In Justice Anderson’s decision, we hear loud and clear the voices of eight Australian investors who’ve lost hundreds of thousands of hard-earned savings. The average age of those eight voices is a retirement age of 67 years, beginning with the voice of one young 29-year-old investor through to the voice of an 84-year-old gentleman. Banning Mr Mawhinney from offering financial products for two decades matters for the many other investors that Mr Mawhinney may otherwise have lured into these risky investment products.
Mawhinney was ordered to pay ASIC’s costs of the application for the injunction.
Experienced writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.
