ASIC disqualifies and bans the former MD of Provident Capital Ltd

asic bans

On 2 May 2017 the Administrative Appeals Tribunal (AAT) upheld ASIC’s decision that Mr Michael Roger O’Sullivan of Sydney be disqualified from managing corporations for five years and from providing financial services for seven years.

The AAT qualified the five-year disqualification decision by permitting Mr O’Sullivan to remain as a director of three private companies, provided that those companies only involve activities relating to Mr O’Sullivan’s immediate family.

In affirming ASIC’s decision, the AAT stated that the ‘the behaviour of Mr O’Sullivan has fallen below the standard that is expected and required of a public company director.’ The AAT also found that Mr O’Sullivan showed no ‘genuine contrition for his conduct or genuine insight into his corporate failures.’

The AAT also noted that Mr O’Sullivan’s behaviour ‘involved either a subconscious or at times an attempt to camouflage or massage critical information and to even completely prevent that information from being disclosed on a timely basis.’

The AAT highlighted that ‘deficient disclosure [of information] was designed to obfuscate the real position’ and that this behaviour ‘put at risk the funds of certain third party investors who were largely being kept in the dark about the precarious nature’ of one of Provident’s largest loans.

John Price, ASIC

ASIC’s Commissioner John Price welcomed the AAT finding, saying:

ASIC is committed to taking action against directors who fail to exercise care and diligence in the management of company assets. ASIC’s powers to disqualify directors of failed companies and to ban individuals from providing financial services are important preventative measures to safeguard the public interest.

Mr O’Sullivan had previously been granted a stay of the disqualification order, pending the AAT’s review of ASIC’s decision.

Mr O’Sullivan has 28 days to appeal this decision to the Federal Court.

ASIC action against other Provident directors 

On 1 July 2015 ASIC banned former non-executive director of Provident Capital, Mr John Patrick Sweeney of Sydney, from providing financial services for two years. ASIC found Mr Sweeney failed to comply with financial services laws.

On 28 July 2015 ASIC banned former non-executive director of Provident Capital, Mr Trevor John Seymour, from managing corporations for three years and providing financial services for three years. ASIC found Mr Seymour breached his duties as a director and failed to comply with financial services laws. Mr Sweeney and Mr Seymour also sought a review of ASIC’s decision in the AAT. The hearing of the review of Mr Sweeney’s and Mr Sweeney’s decisions concluded on 14 February 2017 and a decision by Senior Member Taylor is pending.

On 19 April 2016 ASIC banned former executive director and in-house legal counsel of Provident Capital, Mr Malcolm Bersten, from managing corporations and providing financial services for five years. On 25 May 2016 Bersten was granted permission to manage the trustee of his family trust and self managed superannuation fund (Caldabra Investments Pty Ltd ACN 003 958 423), as well as his incorporated legal practice (Bersten Legal Pty Ltd ACN 098 743 483). Mr Bersten has also sought a review of ASIC’s decision in the AAT and the five-day hearing is currently set down to commence 23 October 2017.

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