ASIC has started legal action against LM Investment Management (LMIM) founder, Peter Charles Drake, and former directors, seeking financial penalties and banning orders following the collapse of the Gold Coast-based fund manager.
ASIC’s civil penalty proceedings in the Federal Court of Australia are against Mr Drake, Francene Maree Mulder, Eghard van der Hoven, Simon Jeremy Tickner, and Lisa Maree Darcy.
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ASIC alleges Mr Drake used his position to gain an advantage for himself and the former directors breached their director’s duties for failing to act with the proper degree of care and diligence regarding transactions involving the LM Managed Performance Fund (MPF).
Specifically, ASIC’s action focuses on the conduct of the directors in signing off on a series of loans to Maddison Estate Pty Ltd, which Mr Drake owned and controlled, in 2011 and 2012.
MPF loaned funds to Maddison Estate Pty Ltd, to develop a property development on the Gold Coast known as ‘Maddison Estate’. Mr Drake was the sole director of Maddison Estate Pty Ltd and the beneficiary of a discretionary trust, managed by another company controlled and owned by him, that held all the beneficial ownership in the company.
ASIC Commissioner Greg Tanzer said, ‘Investors should be able to have confidence that the people responsible for managing their investments act appropriately, take a diligent and intelligent interest in the affairs of the company, and apply an enquiring mind to the responsibilities placed upon them.’
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By GlobalDataThe maximum fine for a director breaching their duties is $200,000 for each contravention. As well as fines, ASIC is also seeking to disqualify Mr Drake and the former directors from managing companies and providing financial services.
The proceedings are listed for a directions hearing in the Federal Court in Brisbane on 25 November 2014.
