ASIC DROPS CIVIL CASE AGAINST LM INVESTMENT DUO
Written on the 22 September 2016 by Nick Nichols
TWO directors of failed Gold Coast funds manager LM Investment Management (LMIM) have been spared further proceedings by the corporate watchdog after it dropped a civil action against them.
However, the Australian Securities and Investments Commission is still pursuing the matter against three others, including former CEO Peter Drake (pictured), following the collapse of the $3 billion LM Investment group in 2013.
ASIC says it has discontinued its proceedings against Simon Tickner and Lisa Darcy, former directors of LMIM.
The charges related to a loan in 2011 to an associated entity, Maddison Estate Pty Ltd, which was owned and controlled by Drake.
The private company owned a major development site in the Brisbane-Gold Coast growth corridor at Pimpama where it was planning to develop the Maddison Estate, a project touted by Drake at the time to be worth $1.5 billion.
LMIM had loaned $250 million of investor capital from the LM Managed Performance Fund against the development site ahead of construction work starting on the project.
ASIC's civil charges against the five former directors of LMIM were filed in 2014.
The corporate regulator alleged Drake used his position to gain an advantage for himself and that the former directors had breached their director's duties for failing to act with proper care with transactions involving the LM Managed Performance Fund.
ASIC was seeking to disqualify the former directors from managing companies and from providing financial services. The directors also faced potential fines of up to $200,000 for each contravention.
The Federal Court proceedings began on August 29 this year and concluded on September 12. However, ASIC has now revealed it is dropping charges against Tickner and Darcy in the matter.
"The claims against Mr Tickner and Ms Darcy focused on their conduct as directors in signing off a loan to Maddison Estate Pty Ltd, which Mr Drake owned and controlled, in 2011," said ASIC in a statement.
"Proceedings against the other directors focused on both the 2011 transaction and another transaction that occurred in 2012."
ASIC says the proceedings related to the 2012 transaction will continue against Drake, Mulder and van der Hoven. The proceedings have been adjourned until this Friday, September 23, for closing submissions.
At its peak, LM Investment Management had $3 billion under management through a number of funds. The money was raised over more than a decade from retail investors in 70 countries where the company established offices.
LM Investment Management and associated entities have since been placed in liquidation, while Drake filed for voluntary bankruptcy in 2015.
The 105ha Maddison Estate site was acquired by Brisbane-based developer Sunland Group (ASX:SDG) in 2013 for $24.75 million through a debt buyout deal with first mortgagee Suncorp (ASX:SUN).
Sunland is developing The Heights residential estate on the site, with four stages already released. The project is expected to be rolled out by the group over the next eight years.
Author: Nick Nichols