The Federal Court has delivered a judgment against Adam Blumenthal, former director of EverBlu Capital and Creso Pharma (now Melodiol Global Health), mandating him to pay $850,000 in penalties and disqualifying him from managing corporations for five years, ASIC reported.
The decision follows findings that Blumenthal engaged in market rigging and failed to fulfill his directorial duties, impacting the integrity of financial markets.
On April 17, the court found that Blumenthal manipulated the market by engaging in market rigging on 14 occasions, particularly concerning transactions for EverBlu clients related to the purchasing of shares in ASX-listed Creso.
He also breached his responsibilities by inadequately managing conflicts of interest and failing in due diligence, which led to significant unwarranted financial transactions.
Justice Angus Morkel Stewart criticised Blumenthal’s actions.
“The contraventions are interrelated,” Stewart said. “They each had their source in Mr Blumenthal’s large shareholding in Creso, his position as the chairman of a financial services licensee with a capacity to employ trading strategies, and his intention of presenting a false or misleading picture to the market for Creso shares.”
The judge stressed that these activities undermined fundamental financial system obligations and public confidence.
ASIC chair Joe Longo (pictured above) commented on the ruling, stressing the importance of maintaining market integrity and directorial accountability.
“Promoting market integrity and addressing director misconduct are enduring priorities for ASIC,” Longo said in a media release.
“Market rigging is serious misconduct that impacts the integrity of Australia’s financial markets and prevents these markets from operating fairly and transparently.”
Longo said that the penalties should deter similar misconduct and remind directors of their critical responsibilities.
Prior to this case, ASIC sued the director of Solve My Debt Now for leaving most of their clients in a worse financial position and the sole director of Equitable Financial Solutions for allegedly diverting $1.75m in company funds.
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