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Herft and his AMMA Private Equity group own another tech play, the video messaging service Kwickie, and the Australian Securities and Investments Commission (ASIC) has ruled that he cannot allow retail investors to buy shares in Kwickie.
"ASIC has made a declaration, to put the issue beyond doubt, that Kwickie International Ltd shares may not be offered to retail investors through a trust structure," ASIC says in a statement.
ASIC says it is concerned that some accountants may be harming retail investors by inappropriately providing 'sophisticated investor' certificates and referred directly to Herft's Kwickie business.
"ASIC is aware that, in certain recent fundraisings, some accountants have used trust or company structures that purport to allow investors who are not 'sophisticated investors' to receive offers to purchase shares without a prospectus or other disclosure document.
"This has recently occurred in relation to offers of shares by Kwickie International Limited.
"ASIC is continuing its investigation into the use of these structures. ASIC is also in discussions with the appropriate accounting professional bodies about this issue."
The regulator's move comes amid an ongoing investigation into AMMA and its fundraising activities, which include more than $180 million raised for streaming music service Guvera prior to an ill-fated attempt last year to list on the ASX with a market value of more than $1 billion.
Guvera was founded in 2008 by Darren Herft and Claes Loberg and the pair raised the $180 million over four years as they sought to commercialise the service, but the rejection of the IPO was a huge blow.
In FY16, the company made a loss of $81.1 million on revenue of $1.2 million and its planned IPO was criticised by prominent Australian tech entrepreneurs, including Atlassian co-founder Mike Cannon-Brookes.
The music streaming app stopped operating in May after it was blocked for its IPO and ASIC is now investigating what happened to the $180 million from its 3,000 investors.
Claes Loberg told The Australian newspaper this week that Herft and his investment vehicle AMMA Private Equity were to blame for the demise of Guvera.
Business News Australia
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