The Australian Securities and Investments Commission (ASIC) has commenced civil penalty proceedings against Dixon Advisory for alleged conflicts of interest, best interest failures and inappropriate advice in regards to investments in a United States-based property fund.
The corporate regulator began the proceedings in the Federal Court against Dixon Advisory and Superannuation Services Limited, which is a subsidiary of Australian Securities Exchange (ASX)-listed Evans Dixon Limited.
ASIC has alleged that when giving advice about investments in the US Masters Residential Property Fund (URF) and URF-related products – established by Dixon Advisory – between 2 September 2015 and 31 May 2019, Dixon Advisory representatives knew or ought to have known there was a conflict between their clients’ interests and the interests of entities associated with Dixon Advisory.
The URF is an ASX-listed property fund established in 2011 to give investors exposure to the US residential property market and during the period above paid substantial fees to several companies owned by Evans Dixon, including Dixon Advisory.
The regulator has also alleged Dixon Advisory representatives failed to give priority to their clients’ interests and that in financial advice given to eight sample clients, 51 separate instances of financial advice were provided, each of which resulted in two or more contraventions of best interests duties under the Corporations Act.
ASIC stated it is seeking declarations of contraventions and pecuniary penalties against Dixon Advisory, with the maximum civil penalty for contraventions alleged against Dixon Advisory being $1 million per contravention for contraventions prior to 13 March 2019, and $10.5 million per contravention after that date.
It is also seeking orders that Dixon Advisory put in place appropriate systems, policies and procedures to ensure its representatives comply with best interests’ obligations and provide a written report from an independent expert confirming this compliance.
In 2015, Dixon Advisory paid more than $10,000 to ASIC in infringement notices after the regulator found it had run potentially misleading claims about SMSFs.