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Unlicensed SMSF business ordered to windup
Secure Investments and Aquila Group have been ordered to wind up by the Federal Court after issuing financial products to investors without holding an Australian financial services licence (AFSL).
According to the Australian Securities and Investments Commission (ASIC), Secure Investments and its director, Mudasir Naseeruddin had breached the Corporations Act by the court.
It is alleged that Naseeruddin encouraged investors to roll over their superannuation accounts into self-managed superannuation funds (SMSFs) set up by an associate.
ASIC alleged the funds were then transferred through a cash management account to Secure Investments and that significant amounts of funds held by Secure Investments were then transferred to accounts held by Naseeruddin and various other related entities with no identifiable corporate purpose and funds had not been repaid to investors.
In making the breach finding, Justice Derrington, said: “Secure Investments was carrying on a financial services business by issuing financial products to investors. It held itself out as being engaged in the business of providing direct property development investment opportunities for investors and the evidence discloses that it received approximately $2.4 million in funds from 28 different SMSFs in the period from early 2017 to late 2019.
“Its conduct of issuing those financial products was repetitive and continuing for commercial or business purposes and was done in order to derive income. As such, it was engaged in those activities for the purpose of carrying on a business. As it was not authorised pursuant to any relevant AFSL to carry on that business, Secure Investments contravened the prohibition in s 911A of the act.”
In November, 2019, ASIC issued separate proceedings against Secure Investments and Aqulia Group through Naseeruddin raised a further $250,000 from investors.
The court stated: “The financial management of Aquila Group under the control of Naseeruddin replicated that of his erstwhile stewardship of the affairs of Secure Investments. That is to say that, whilst Naseeruddin and Aquila Group received funds from investors for investing in building developments, those investments did not materialise.
“The funds were used for other purposes and dispersed without any proper recording of the transactions which justified such payments.”
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