)
An advisory arm of Evans Dixon (ASX: ED1) has come under fire from Australia's corporate regulator for recommending clients invest in a related property fund that has since lost at least 87 per cent of its value.
The Australian Securities and Investments Commission (ASIC) has today filed proceedings in the Federal Court against against Dixon Advisory and Superannuation Services alleging representatives failed to act in the best interests of clients.
ASIC's case involves eight sample clients of Dixon Advisory who were recommended to invest in US Masters Residential Property Fund (URF) and URF-related products between 2 September 2015 and 31 May 2019.
At the beginning of that window the URF share price was trading at around $2.25, but a string of poor results led it to fall to around the $1 mark by the end of May 2019 and just $0.23 today.
Even before the onset of COVID-19, the struggling New York housing market led to a drastic reduction in URF's net asset values.
Then in mid-2019 then Evans Dixon CEO Alan Dixon resigned from the role and went to the US to try and turn URF's fortunes around, only to take an extended leave of absence and ultimately leave the group by October.
ASIC alleges that in advising its clients to put their money into URF, Dixon Advisory representatives ought to have known that there was a conflict between their clients' interests and the interests of entities associated with Dixon Advisory within the Evans Dixon group.
The corporate watchdog alleges that a total of 51 separate instances of financial advice were provided to the eight sample clients in the relevant period, each of which resulted in two or more contraventions of 'best interests duties' under the Corporations Act.
ASIC is seeking declarations of contraventions and pecuniary penalties against Dixon Advisory.
The maximum civil penalty for contraventions alleged against Dixon Advisory is $1 million per contravention for contraventions prior to 13 March 2019, and $10.5 million per contravention after that date.
Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.Business News Australia
)
)
)
)
)
