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An Australian investment group has been taken to the Federal Court by the corporate watchdog over allegedly misleading and deceptive online advertisements.
The Australian Securities and Investment Commission (ASIC) alleges Mayfair 101, a property investor with a significant portfolio of land and tourism assets in North Queensland including Dunk Island, represented two debenture products as being term deposits online.
Mayfair Wealth Partners (trading as Mayfair Platinum) and Online Investments (trading as Mayfair 101) promote two debenture products to wholesale investors. These products are both unsecured promissory notes.
However, ASIC says when Mayfair Platinum and Mayfair 101 promoted the debenture products on Google AdWords and Bing Ads they would appear as sponsored links when a consumer would search for "bank term deposit" or "term deposit" online.
Further, ASIC says Mayfair's promotional material for the products used words including "term deposit alternative", "term investment", "fixed term", "certainty", "confidence" and "capital growth".
As such, ASIC alleges Mayfair Platinum and Mayfair 101 made statements that were false, misleading, or deceptive by representing that these debenture products were comparable and had a similar risk profile to bank term deposits when they were actually debentures with a significantly higher risk profile.
The watchdog also alleges that Mayfair made false or misleading statements by representing that:
- The principal investment would be repaid in full on maturity, when investors may not receive capital repayments on maturity or at all, and because Mayfair could elect to extend the time for repayment for an indefinite period;
- The debenture products were specifically designed for people seeking "certainty and confidence in their investments", when investors may not receive interest and/or capital repayments, and could lose some, or all, of their investment; and
- Mayfair debenture products provide capital growth opportunities, when they do not.
The Mayfair 101 group has responded to ASIC's allegations. It maintains its financial products are fully compliant with the law and will be "vigorously" contesting proceedings in the Federal Court.
"The Mayfair 101 Group will contest ASIC's claims in full," says Mayfair 101.
"Mayfair Platinum's products are available to wholesale clients only and disclosures are made to advise that Mayfair Platinum is a provider of non-bank investment products."
"The risks and benefits are clearly stated on all Mayfair Platinum's disclosure documents."
The group says no investor in any of Mayfair Platinum's products has had a capital loss and all interest distributions have been paid in full.
In the Federal Court ASIC is seeking injunctions to restrain the publication of statements of this kind and pecuniary penalties in relation to the alleged false or misleading representations.
Additionally, on 11 March 2020 Mayfair Platinum suspended payment of capital redemptions to investors in the Mayfair debenture products due to liquidity issues. Because of this ASIC is seeking an interim injunction to restrain the defendants from promoting and issuing more debenture products while redemptions to existing investors remain suspended.
ASIC's injunction application will be heard in the Federal Court on 14 April 2020.
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