ASIC won court orders to appoint liquidators to a trust, a land banking project, which had 125 investors with $22 million. Moreover, the VKK Investment Units Trust had acquired land near Melbourne that has been rising rapidly in value in recent years with Melbourne’s population surging to almost 5 million.
Reading ASIC’s press release on the matter and following mainstream media’s coverage (such as The Australian or Fairfax) you’d be misled to think ASIC was acting to protect investors’ interest.
However, at ANR we don’t accept press releases as fact. On the other hand we question anything and everything a company or government agency says in a press release.
Peter Kell of ASIC says the corporate watchdog has been focusing on land banking. Land banking has been a legitimate strategy for decades from which large property companies have made billions of dollars. Also, ASIC isn’t the property regulator, so shouldn’t they firstly become a competent securities regulator before interfering outside their jurisdiction?
He says “the ruling is a warning to those involved in unlawful schemes, including land banking (actually, why is land banking in recent years unlawful when no law has ever been changed to make land banking unlawful) and will move to protect investors and have these unlawful schemes removed.
Firstly, ASIC talks about protecting investors. Since when does liquidating land projects protect investors?
ASIC has now caused close to $100 million in losses to investors by unnecessarily liquidating numerous land banking projects when they could have easily acted in a manner to protect investor interests by requiring them to be licensed (which ASIC often prevents) or administrators appointed and land sold later when its value has continued to increase, so investors don’t lose money. After all, investors invest in land banking as they’re banking the land for 10-20 years to profit from.
Peter Kell says, “they are often unregulated and that investors have little protection if something goes wrong”. (Not correct, they are regulated by the property industry and property laws).
ASIC intervening has resulted in deliberate and unnecessary losses for numerous land projects and investors. In fact, ANR could not find a single loss in Australia in recent times from land banking other than the ones caused by ASIC itself.
Perhaps ASIC’s press release should state: “don’t invest in land and become rich over time, as we will put our nose into the property market (where it doesn’t belong) and deliberately cause you losses because at ASIC we care about wining court cases, not protecting investors”.
To win cases, ASIC needs to show investor losses to have a case in the first place. Therefore, they appoint liquidators to perfectly profitable and safe land projects that are rapidly rising in value, whether they get rezoned or not.
It’s believed that ASIC causes deliberate investor losses because it learned after its failed 5-year case against Andrew Forrest of FMG that to win cases it’s best to cause losses by appointing liquidators, so they can firesale the land before the trial to show losses.
ASIC has also failed to stop the rorts in the financial planning industry for two decades now, as it seems to think if something is licensed under ASIC, then it’s fine. Yet, the biggest financial scams have been the ones licensed by ASIC.
Ironically, investors need protection from the government agency that taxpayers actually expect to protect them.
How many more mum and dad investors must suffer financial losses by ASIC’s abusive, deliberate and unnecessary actions, before politicians wake up to what ASIC is actually up to?
ASIC could easily act in a manner that protects investors if it has concerns with land banking by stating what laws now require them to be licensed (there aren’t any). They could also request simple enforceable undertakings, create guidelines for the industry to follow instead of appointing liquidators that firesale assets and keeping the majority (often 100% of proceeds) to themselves leaving investors with zero. ASIC knows full well before it appoints liquidators that this will be the outcome. Thus, their actions to screw over investors are clearly deliberate. Where is the media outrage to highlight the investor outrage? Why aren’t politicians standing up for investors’ financial lives destroyed by ASIC?
One must also question the very cosy relationship many ASIC officers have with the liquidating firms, as many seek employment with them after leaving ASIC.
I am sure gifting liquidators with lucrative roles to rape and pillage investors’ money surely must help when they later apply for a job with the accounting firms who get these profitable gigs, thanks to ASIC
An ANR investigation has found that from all the land banking projects ASIC has caused losses to in recent years, not a single dollar has been paid back to investors. However, it was all used up in liquidation fees.
One would think what ASIC and the liquidators are up to should be unlawful.
But as you know, you won’t hear a peep of this from mainstream media, as ASIC works in collusion with its mainstream media buddies.
Taxpayers and investors get ripped off again. After all, who needs banks or financial planners to rip us off, especially when we have the ‘good ole’ ASIC doing it for us using taxpayers’ money?