ASIC Obtains Court Orders to Close Two Unlicensed Financial Service Entities

The Federal Court of Australia has ordered the closures of two unlicensed financial services entities, namely Secure Investments Pty Ltd (Secure Investments) and Aquila Group Pty Ltd (Aquila Group).

Acoording to the Court, Secure Investments and Mr Mudasir Naseeruddin carried out financial services activites without holding an Australian financial services licence(AFSL), which breached the Corporations Act.

In making this finding, Justice Derrington stated:“Secure Investments was carrying on a financial services business by issuing financial products to investors. It held itself out as being engaged in the business of providing direct property development investment opportunities for investors and the evidence discloses that it received approximately $2.4 million in funds from 28 different SMSFs in the period from early 2017 to late 2019... As it was not authorised pursuant to any relevant AFSL to carry on that business, Secure Investments contravened the prohibition in s 911A of the Act.” 

Mr Naseeruddin encouraged investors to roll over their superannuation accounts into self-managed superannuation funds (SMSFs) , founded by an associate of Mr Naseeruddin. The Australian financial markets conduct regulator ASIC alleges that investor funds were then transferred via a cash management account to Secure Investments, whose majority of assets were then transferred out to accounts held by Mr Naseeruddin and various other related entities with no identifiable corporate purpose. Additionally, the funds have not been repaid to investors.

Prior to this order, ASIC issued separate proceedings against Secure Investments in November 2019. Aquila Group, through its director Mr Naseeruddin, scooped a further $250,000 from investors. 

In relation to Aquila Group, the Court stated:“… the financial management of Aquila Group under the control of Mr Naseeruddin replicated that of his erstwhile stewardship of the affairs of Secure Investments. That is to say that, whilst Mr Naseeruddin and Aquila Group received funds from investors for investing in building developments, those investments did not materialise. The funds were used for other purposes and dispersed without any proper recording of the transactions which justified such payments.”

ASIC’s investigation is continuing.