Tuesday 9 January 2007 The Australian Securities and Investments Commission (ASIC) has cancelled the Australian financial services licence of Sovereign Capital Limited (Sovereign). ASIC cancelled Sovereign’s licence after finding that Sovereign’s activities have been well below the standard a reasonable person would expect of a financial services licensee. Sovereign was licensed in January 2004 and has been the responsible entity for the Sovereign Prudential Fund (the Fund) since 1999.
In particular, ASIC was concerned about Sovereign’s conduct in relation to disclosure, management of conflicts, due diligence and fairness between investors. ASIC also found that amongst other things, Sovereign has not: • operated the Fund in an efficient, honest and fair manner; • acted in accordance with financial services laws; nor • complied with its obligations as a licensee.
‘Those holding a financial services licence are expected to abide by the law and behave in way that puts the interests of investors first. ASIC will seek to remove anyone who falls short of these minimum standards from the industry’, Ms Jennifer O’Donnell, ASIC’s Executive Director of Compliance, said. Sovereign has the right to lodge an application for a review of ASIC’s decision with the Administrative Appeals Tribunal. Background Sovereign’s licence was cancelled following an administrative hearing held under the Corporations Act, before an ASIC delegate.
The Sovereign Prudential Fund is involved in lending money to property developers in New South Wales, Victoria and Queensland. On 11-12 December, ASIC intervened in an application brought by Sovereign to wind up the Fund. ASIC intervened in the application, seeking the appointment of an independent liquidator because it was concerned that Sovereign was not the appropriate entity to wind up the Fund. Instead of appointing an independent liquidator, the Supreme Court of Queensland ordered that Sovereign be permitted to wind up the Fund under the supervision of Mr William Fletcher, of Bentleys MRI, who was appointed supervising accountant.
Based on the information provided to the Supreme Court by Sovereign in an application to wind up the Fund, the Fund has approximately $54 million invested on behalf of approximately 700 investors. For further information contact: Jennifer O’Donnell Executive Director Compliance Telephone: 02 9911 2123 Mobile: 0411 549 257 Danielle Huck ASIC Media Unit Telephone: 03 9280 3407 Mobile: 0417 540 769