Mayfair 101 director James Mawhinney slapped with 20-year ban

Update (15/9/22): The appeals division of the Federal Court has since overturned Mawhinney's ban and remitted the case back to the lower courts. Read more here.

James Mawhinney, a director of Mayfair 101 Group, has been given a 20-year ban from promoting and raising funds through financial products today after the Federal Court found he engaged in "reprehensible" conduct.

The restraint is the result of proceedings brought by the Australian Securities and Investment Commission (ASIC) against Mawhinney, with the Federal Court finding there was a high likelihood the director would engage in similar conduct again if a ban were not handed down.

With approximately $211 million in investors losses attributed to multiple product failures across the Mayfair 101 Group, ASIC deputy chair Karen Chester has celebrated the win on behalf of unsophisticated investors who were "lured" into high risk products via misleading marketing.

The decision comes after the Federal Court found Mayfair 101 misled investors by promoting debenture products online as being term deposits.

The Mayfair 101 Group offered investments in multiple financial products including M Core Fixed Income Notes (Core Notes), M+ Fixed Income Notes (M+ Notes), the IPO Wealth Fund, Australian Property Bonds and IPO Capital.

The companies that offered the Core Notes and the IPO Wealth Fund are in liquidation and redemptions in the remaining products have been suspended since March 2020.

Justice Anderson of the Federal Court found Mawhinney has been "involved in multiple contraventions" and his conduct can be characterised as "serious, incompetent and reckless and displaying a propensity for conduct in disregard of the requirements of financial services laws".

"Mr Mawhinney's conduct can accurately be described as reprehensible conduct which demonstrates a complete disregard for financial services laws and, as a consequence, places the public at great risk of financial loss should Mr Mawhinney not be restrained by the form of injunction sought by ASIC," Justice Anderson said.

The Court also found Mayfair Wealth Partners, which promoted the Australian Property Bonds, took $100,000 from an investor without so much as contacting them or issuing the product - conduct described as "reprehensible" by Justice Anderson.

"No competent, fair or reasonable financial services provider takes money from an investor without having proper administrative procedures in place to ensure the relevant product is issued to the relevant investor," Justice Anderson said.

The injunctions will prevent Mawhinney from advertising and raising further funds through any new financial products including Mayfair 101 products in the future.

The Court also restrained Mawhinney from removing from Australia any assets acquired with funds received from the public for investments in financial products for 20 years, without a court order.

"This case demonstrates that ASIC's 'true to label' expectations are enforceable. It also demonstrates ASIC is both willing and able to take action not only against the companies involved but also their senior executives," says ASIC deputy chair Karen Chester.

"Justice Anderson's decision makes clear why ASIC brought this action and that the business models for these products were flawed from the outset. The responsibility for the losses and the egregious harm to investors is, as the judgment makes clear, all down to the contumelious actions of Mr Mawhinney.

"In Justice Anderson's decision, we hear loud and clear the voices of eight Australian investors who've lost hundreds of thousands of hard-earned savings."

Mawhinney was ordered to pay ASIC's costs of the application for the injunction.

In separate proceedings commenced by ASIC against the Mayfair 101 Group and its director James Mawhinney, on 13 August 2020, the Federal Court appointed provisional liquidators to M101 Nominees and made interim injunctions against Mawhinney.

Following that, the Court ordered M101 Nominees be wound up. That action arose after M101 Nominees raised approximately $67 million from investors during 2019 and 2020 based on representations that funds from investors would be fully secured, when they were not.

M101 Nominees stopped repaying funds to investors in March 2020 and froze interest payments to investors from June 2020.

In more legal trouble for a Mayfair 101 Group company, Slater and Gordon hit IPO Wealth Fund with a class action over allegedly misleading marketing back in December 2020.

The firm alleges IPO Wealth Fund pitched itself to consumers as a "term deposit alternative" when it was instead a "risky, liquid and speculative investment".

The Federal Court proceedings have been brought against the Trustee of the fund, Vasco Investment Managers, and DH Flinders, the Australian financial services licensee responsible for the conduct of its authorised representative IPO Wealth.

According to Slater and Gordon some $86 million in funds were raised from investors between April 2017 and March 2020.

The firm anticipates a substantial amount will not be able to be recouped by the liquidators.Mayfair 101 director James Mawhinney slapped with 20-year ban

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