The corporate regulator has commenced proceedings against the controversial investment firms within the Mayfair 101 group, alleging that its advertisements are “misleading and deceptive”.
ASIC issued a notice late on Monday advising that it is seeking injunctions against Mayfair 101 and Mayfair Platinum stopping them from advertising and issuing further products after the group suspended redemptions to their investors in early March due to liquidity concerns instigated by the coronavirus crisis.
The injunctions seek to both stop Mayfair’s firms from publishing “false, misleading or deceptive” statements about its products, and restrain them from further promoting and issuing their signature debenture products while existing redemptions are suspended.
The Mayfair 101 group has previously come under scrutiny for targeting investors who classify as ‘wholesale’ under two-decade old monetary benchmarks. In February, UNSW professor Pamela Hanrahan used Mayfair as an example of firms that use nefarious mass marketing to target people who lack experience with complex illiquid investments.
“I would restrict the general advertising of wholesale offers,” Hanrahan told Professional Planner. “You shouldn’t be able to advertise in the newspaper, especially without the kinds of warnings that are routinely required elsewhere, including in the UK.”
In its notice, the regulator went into some detail about Mayfair group’s advertising on search engines, noting that its products appeared as sponsored links whenever consumers searched for the words “bank term deposit” or “term deposit’ online.
Mayfair companies used marketing material that promoted its products as comparable to bank term deposits, ASIC alleged, despite the debenture’s having a “significantly higher risk profile”. The regulator also said the firms promised that investments would be paid upon maturity when that may not be the case – a scenario investors will hope does not play out during the current coronavirus crisis.
Similarly, ASIC noted, the products were designed and marketed for people seeking “certainty and confidence in their investments”, despite the fact that investors could lose their investment. The regulator also took exception to Mayfair’s representation that its products provide capital growth opportunity, “when they do not”.