ASIC planner ban upheld

The Administrative Appeals Tribunal (AAT) has affirmed the Australian Securities and Investments Commission¹s decision to ban Mervyn Ross Tarrant of Albion Park, New South Wales, from providing financial services for seven years.

In affirming ASIC¹s decision, the AAT found a banning order of at least seven years was appropriate because “there have been numerous breaches of financial services laws. Those breaches have been serious and repeated. A consequence of the breaches has been significant loss to the retirement savings of investorsŠthere is evidence of incompetence and negligent, if not wilful, breach.”

Mr Tarrant was the sole director and authorised representative of Tarrants Financial Consultants Pty Ltd (TFC), a financial services firm in Wollongong which invested more than $23 million of its clients’ funds in Astarra Strategic Fund (formerly known as the Alpha Strategic Fund) (ASF), a managed investment scheme promoted by Trio Capital Limited and Shawn Richard.

On 25 November 2011, ASIC found that Mr Tarrant had not complied with various financial services laws and banned him from providing financial services for seven years.

Mr Tarrant subsequently applied to the AAT for a review of ASIC’s decision. On 7 December 2011, the AAT ordered that ASIC be stayed from issuing any public announcement in relation to the banning order of Mr Tarrant.

On 20 December 2013, the AAT affirmed ASIC’s decision to ban Mr Tarrant from providing financial services for seven years and revoked the stay order. The AAT found the breaches by Mr Tarrant were serious and included:
– failing to disclose in statements of advice the receipt of a marketing allowance from Shawn Richard for investing clients’ monies in the ASF. From November 2008 to December 2009, an associate of TFC, Tarrants Finance Pty Ltd of which Mr Tarrant was director, received more than $1.1 million in marketing allowance from Mr Richard;
– making false or misleading statements about remuneration or benefits in statements of advice to clients;
– engaging in misleading or deceptive conduct by making various representations about remuneration or benefits to TFC’s staff by including the representations in powerpoint presentations that TFC’s staff delivered to clients; and
– failing to have a reasonable basis for the advices he provided to eight clients. Each of the eight clients were recommended to borrow a significant amount of money, invest a high proportion of their investments in the ASF, and set up a self-managed superannuation fund to allow the superannuation funds to be invested in the ASF.

Deputy Chairman Peter Kell said: “The seriousness of Mr Tarrant’s behaviour ­ which was highlighted by the AAT as being incompetent and negligent ­ meant that ASIC took all the necessary steps to ensure he was removed from the industry for a substantial period of time.”

Since ASIC’s Trio investigation started in October 2009, more than 11 people have either been jailed, banned from providing financial services, disqualified from managing companies or have agreed to remove themselves from the financial services industry for a total of more than 50 years.