Supreme court punishes property group for SMSF property spruiking

by Julia Corderoy20 Oct 2015
A large property group has been found guilty by the Supreme Court of NSW of SMSF property spruiking.

Following ASIC action, the Supreme Court of NSW found that Park Trent Properties Group had been unlawfully carrying on a financial services business for over five years by providing advice to clients to purchase investment properties through an SMSF.

In his judgment, his Honour Acting Justice Sackville said it was in the public interest that Park Trent be restrained from carrying on a financial services business. 

ASIC launched legal proceedings in November 2014 against Park Trent who, by the time of the trial in June 2015 had advised over 860 members of the public to establish and switch funds into an SMSF.

According to the regulator, in handing down his judgment, his Honour observed that Park Trent's business model depended on “persuading relatively unsophisticated investors of the virtues of using their superannuation accounts to purchase investment properties and to establish SMSFs… Investors were influenced to make important decisions concerning their superannuation strategy with little or no genuine consideration of whether the decision took proper account of their individual financial circumstances. Some suffered financial loss as a consequence.”

His Honour also claimed Park Trent's CEO, Ronald Cross was willing to “ignore legal advice as to the nature of Park Trent's statutory obligations” and said this decision should serve as a warning to others who seek to influence clients to establish SMSFs for investment purposes, without having the necessary licence to do so.

ASIC’s deputy chairman Peter Kell said the regulator’s message is that anyone recommending or facilitating SMSFs as a way of investing in property will need to have a licence and provide appropriate advice that prioritises the client's interests – otherwise they are breaking the law.

The parties have until 29 October 2015 to file submissions on the form of final orders.
 

COMMENTS

  • by observer 20/10/2015 10:02:26 AM

    About time. Last time Park Trent went into liquidation, they hoodwinked the liquidator about the company assets and then bought the company shell back from the liquidator so that the undisclosed asset could be redeemed. Let's see how they go about avoiding any specific damages this time.

  • by Regional Broker 20/10/2015 10:14:59 AM

    At last some real action on group who are acting outside of the law and regulations!

  • by Honest Broker 20/10/2015 10:49:55 AM

    It makes me laugh that our business worries about missing one signature on a credit guide, concerned about the implications if audited. And yet, there are so many people doing dodgy deals who when caught are told, you cannot be a broker for 1 or 2 years. Just a joke... Why do we bother spending so much time being sure a compliance audit might uncover a missed signature! Blatant disregard for the laws on the scale of Park Tent should be jail time.