The New South Wales Supreme Court has ruled that an enforceable undertaking of an unregistered managed investment scheme operated by Empower Invest and Newcastle Palais Holdings was breached.
While both companies and its directors complied in part with their undertaking, it was found they failed to repay investors in accordance with the terms of the enforceable undertaking provided to ASIC on 9 May 2008.
The Supreme Court has since ordered that investors in the managed investment scheme be repaid within 28 days of the order made on 30 August 2010, following action taken by ASIC.
If the companies do not comply with the order, ASIC said it would consider making an application to have liquidators appointed.
The corporate watchdog initially investigated allegations both companies and their respective directors, Kenneth Watson and Brien Cornwell, promoted and operated an unregistered managed investment scheme in relation to a property development in Newcastle without registration and without holding an Australian financial services licence.
The scheme raised $769,500 in total from 10 investors. ASIC's investigation revealed that offers had been made to a larger number of investors to join the scheme and it took action to prevent the further promotion of the scheme.
The regulator accepted enforceable undertakings from the companies and directors in which they undertook to inform investors in the scheme of ASIC's concerns, offer to refund money invested, make a refund to any investor who accepted the offer and report to ASIC on any refunds requested and paid to investors.
