Mr Andrew Ferguson, the former Chief Executive Officer of abalone farmer, Australian Bight Abalone (ABA), was today found guilty on 17 counts related to providing false or misleading information to the ABA Board of Directors and prospective investors following a jury trial in the District Court of South Australia.
Following an ASIC investigation, Mr Ferguson was charged with nine counts of disseminating false or misleading information to prospective investors, via grower reports, product disclosure statements and a media release issued by ABA during 2007 and 2008. The jury found that these documents contained false or misleading information about survival rates of the abalone and harvest prospects.
The remaining eight counts were related to providing false or misleading information to the directors of ABA, in reports submitted to the Board about operations at the ABA farm.
During the trial, the jury heard from a number of witnesses involved in the farming operation including marine biologists, operational staff, divers and former directors.
Acting ASIC Chair Peter Kell said:
Company officers are in a position of critical responsibility and trust, and it is expected that their behaviour is beyond reproach. This verdict sends an important signal that misleading investors will not be tolerated.
The matter has been listed for sentencing submissions before the District Court of South Australia on 18 April 2018.
Mr Ferguson’s bail was today revoked and he has been remanded in custody. Mr Ferguson faces a maximum of five years’ imprisonment and/or a fine of $22,000 for each count.
The matter is being prosecuted by the Commonwealth Director of Public Prosecutions.
Background
ABA was Australia’s largest off-shore abalone farmer, raising about $44 million from 1400 investors over four years. ABA operated an abalone farm in off-shore cages located near Elliston in South Australia between 2005 and 2009. The company also operated managed investment schemes (MIS), through which investors acquired interests in abalone grown at the farm, entitling them to returns from the sale of harvested abalone.
The initial MIS project was offered to wholesale investors only in 2005, but a MIS was offered to retail investors in each subsequent year between 2006 and 2009.
Administrators (McGrath Nicol) were appointed to ABA in July 2009 after the company had been able to undertake only a limited harvest of the abalone stock. The Administrators reported that a survey conducted of the abalone stock at the farm suggested significantly higher mortality than had been expected.
Mr Ferguson pleaded not guilty to the charges against him.