Misinformed Advisor Targeting Mayfair 101’s Lenders with Defective Compensation Service
Private equity business Mayfair 101 has warned of an unlicensed advisory company, SR Group, which has charged hundreds of thousands of dollars to Mayfair’s lenders to prepare and lodge spurious Act of Grace claims with the Department of Finance.
It is understood that Sydney-based SR Group arranged for numerous Act of Grace claims to be submitted to the Department of Finance on behalf of Mayfair lenders earlier this month, despite those claims having no prospect of being paid because the Mayfair debt instruments continue to exist across the M+ Fixed Income, M Core Fixed Income, IPO Wealth Fund, IPO Capital and Australian Property Bond products.
Mayfair’s Managing Director James Mawhinney said SR Group’s claims misrepresented the true position of Mayfair and its lenders.
“The $211 million worth of debt instruments that Mayfair’s lenders subscribed to still exist, they are accumulating interest and they retain their face value,” said Mr Mawhinney. “What has occurred is that the Australian Securities and Investments Commission has attempted to destroy our business and its investments, however the debt obligations have survived. This is the nature of debt – the obligation remains.”
Mr Mawhinney said the debt instruments were capable of being repaid in time from the assets previously invested in by Mayfair and from new initiatives being undertaken by the group.
“Just as ASIC failed to do its due diligence prior to acting against Mayfair, no SR Group representative has bothered to pick up the phone or come to our office and find out about the subject matter about which they have been advising our lenders,” said Mr Mawhinney.
“We have lodged a formal complaint with ASIC to investigate SR Group for providing financial product advice to Mayfair’s lenders while unlicensed and where the advice is materially flawed.”
It is estimated that SR Group has charged close to half a million dollars in fees to Mayfair’s lenders who have been impacted by the mis-assessment of Mayfair by ASIC. SR Group has quoted some clients up to ten percent commission on funds recovered under the Act of Grace scheme.
Rather than focusing on ASIC’s misplaced regulatory campaign, the SR Group-prepared submissions have sought to blame ASIC for failing to act – a peculiar position to take considering ASIC’s investigation into Mayfair commenced on 29 January 2020 and less than seven weeks later they initiated enforcement action.
According to the Department of Finance website an Act of Grace is at the discretion of the Finance Minister and is, “generally an avenue of last resort”. Mayfair has received legal advice that any such claims have no prospect while litigation is on foot.
Mayfair 101 continues to trade, is actively running various legal proceedings to preserve value in the group, and is working on new initiatives to restore value so that all debt instruments can be repaid including interest. In the meantime, interest continues to accrue and the debt obligations continue to exist.
Mr Mawhinney says the falsehood of Mayfair’s lenders losing $211 million was first spread by ASIC’s Deputy Commissioner Karen Chester in April 2021 when she stated in an ASIC media release “These are large investor losses, approximately $211 million”. At the time and still to this day, no losses have been declared by anyone other than Ms Chester. Today the debt instruments and obligations continue to exist.
Mark Abernethy: +61 414 310 924