ASIC bans MWL adviser for five years

The Australian Securities and Investments Commission (ASIC) has banned former MWL Financial Services adviser Nicole Liu from providing financial services for five years.

ASIC said Liu recommended clients invest most of their superannuation into the Shield Master Fund, despite its limited trading history and high-risk investment profile.

According to the report, Liu also misled clients about Shield‘s long-term performance, which was non-existent given the fund only launched in 2021.

Background of the Ban

ASIC originally issued the banning order in January, but Liu lodged an application with the Administrative Appeals Tribunal asking for a stay of the decision and confidentiality orders.

Her request was refused in June, and she withdrew her application for a review earlier this month.

Liu is the twelfth MWL adviser ASIC has banned since Shield‘s collapse.

Previous Actions by ASIC

ASIC also banned MWL‘s director, Nicholas Maikousis, in August last year, and cancelled MWL‘s Australian Financial Services Licence (AFSL) at the same time.

The regulator found that Maikousis was the driving force behind MWL‘s so-called low-cost advice project, which relied on referrals from lead generator Imperial Capital Group (ICG) and undisclosed bonus arrangements with advisers who recommended Shield.

ASIC alleged that ICG referred up to 566 clients to MWL – and, by extension, Shield.

Furthermore, ASIC discovered that ICG operated a call centre staffed by “information officers” who were also authorised representatives of Keystone Asset Management, Shield‘s responsible entity.

Ongoing Proceedings

Two weeks ago, ASIC commenced legal action against Keystone directors Paul Chiodo and Ilya Frolov, along with fellow Keystone director Mark Yorston and Keystone compliance committee member Jeremy Danon.

ASIC is seeking pecuniary penalties from all four defendants and disqualification orders for Chiodo, Frolov, and Yorston.

ASIC chair Sarah Court said investors in managed investment schemes are entitled to expect that their investments will be carefully managed on their behalf.

She added that ASIC alleges investors were exposed to conflicted arrangements and poor oversight, and that hundreds of millions of dollars of superannuation was transferred to related entities without basic safeguards.

According to ASIC’s website, the regulator is committed to taking action against companies and individuals who engage in misconduct or fail to comply with financial services laws.

The regulator’s statement of claim outlines the alleged breaches of directorial duties and duties as officers of Shield‘s responsible manager by Chiodo, Frolov, and Yorston. Additionally, Frolov and Danon are alleged to have breached their duties as members of Shield‘s compliance committee.

The ASIC chair’s comments emphasize the importance of holding individuals accountable for their actions and ensuring that directors of managed investment schemes operate in the best interests of investors. The regulator’s pursuit of pecuniary penalties and disqualification orders reflects its commitment to protecting investors and maintaining the integrity of the financial services industry.