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:
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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.
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