The Mayfair 101 Group have been hammered in a Federal Court ruling that is delayed justice for ASIC and the many gullible, poorly-advised citizens that invested in debentures under false pretences.
Essentially a falsehood from the start, Mayfair has been hauled into line long after a naming and shaming by ASIC was warranted.
The Federal Court has found companies in the Mayfair 101 Group made statements that were false, misleading or deceptive in online advertisements for its debenture products, following proceedings brought by ASIC in April 2020.
The Court found Mayfair Wealth Partners Pty Ltd trading as Mayfair Platinum, Online Investments Pty Ltd trading as Mayfair 101, M101 Nominees Pty Ltd and M101 Holdings Pty Ltd, engaged in misleading or deceptive conduct, and made false or misleading representations.
The most odious – the Bank Term Deposit Representations – breached section 12DB(1)(a) of the ASIC Act and section 12DB(1)(e) of the Act.
One of these is; “in connection with the supply or possible supply of financial services, Mayfair made a false or misleading representation that the Mayfair Products had performance characteristics or benefits”.
The second is; “in connection with the supply or possible supply of financial services, Mayfair made a false or misleading representation that the Mayfair Products were of a particular standard, quality, value or grade.”
“When the Mayfair Products expose investors to significantly higher risk than bank term deposits, including by reason of the fact that the Mayfair Products lack the prudential regulations that apply to bank term deposits, and accordingly the Mayfair Products are not comparable to bank term deposits.”
Justice David Anderson could only pour scorn on the business model at the heart of the Mayfair scheme.
“The defendants represented to consumers that the Mayfair Products were specifically designed for investors seeking certainty and confidence in their investments and therefore carried no risk of default - the No Risk of Default Representations - when there was a risk that investors could lose some or all of their principal investment,” Anderson said.
Justice Anderson’s judgment on the Mayfair scheme can be found here.
ASIC deputy chair Karen Chester said ASIC’s “success in court demonstrates firms need to do the right thing by their investors, even when they are wholesale investors.
“They need to make sure they accurately describe their products when advertising.
“Our ‘True to Label’ project that we commenced in late 2019 identified 30 funds with over $10 billion across these funds, that are misleading investors through online advertising,” Chester said.
So where’s the ASIC stick for the rest of them?
Mayfair’s online advertising, Chester said, was misleading by claiming to offer products that involve less risk, when in reality, investors could lose some or all of their investments.
“Advertisements also claimed investors could get their invested money out when they wanted but that was not the case.”
The boilerplate: “This case is a warning that ASIC will not only take action where investments are marketed as safer, lower risk, or more liquid when they are not, but when search engines are used in a misleading or deceptive way to entice investors to products they are not searching for,” Chester said.