ASIC takes action against Guildfords FM, director

ASIC has cancelled the licence of Guildfords Funds Management and banned its managing director Robert Payne for their involvement in the collapse of Magnolia Capital Group.

ASIC found "significant and systemic failures of oversight and compliance" upon investigating Guildfords, which had an AFS Licence (AFSL) to provide advisory and dealing services with respect to managed investment schemes and securities, as well as custodial and depository services to wholesale clients.

It also provided trustee services to unregistered managed investment schemes, including the Magnolia Capital Opportunities Fund II (Magnolia Head Fund).

Magnolia director Mitchell Atkins was an authorised representative of Guildfords between 19 September 2018 to 7 October 2022.

Atkins' other entities that are now in liquidation - Magnolia Investment Management (MIM)and Magnolia Asset Management (MAM) - were also corporate authorised representatives of Guildfords.

Last November, ASIC disqualified Atkins from managing corporations for five years and banned him for 10 years from providing financial services and engaging in credit activities. He has been banned from leaving the country since mid-2023.

ASIC found that Guildfords breached obligations under the Corporations Act 2001 (Act), arising predominantly from its failure to adequately supervise Atkins and MIM that enabled unauthorised high-risk trading of derivative products, specifically contracts for difference (CFD) that resulted in investor losses. The regulator estimated that about $40 million of investor money has been lost.

Further, as trustee of the Magnolia Head Fund, Guildfords dealt in CFDs when it did not hold an AFSL to do so and failed in its breach reporting obligations to ASIC.

Guildfords failed to ensure its representatives complied with financial services laws and was involved in their unauthorised CFD trading.

ASIC also found Guildfords failed in its oversight of documents that had misleading or deceptive and did not have adequate arrangements to manage conflicts of interest arising from Payne being a director of MAM while acting as a responsible manager.

Payne and Atkins were directors of MAM from 30 August 2018 to 13 July 2022.

Payne, who was the responsible manager and sole director of Guildfords, has therefore been banned from financial services for four years. LinkedIn shows that Payne has been managing director of Guildfords since January 2001.

The Guildford group comprises Guildfords Markets and corporate authorised representative Guildfords Business Consultants.

ASIC deemed Payne "lacked the competence and diligence required of a responsible manager" and did not understand the extent of Guildfords' failures to comply with its duties.

ASIC said the AFSL cancellation is subject to specifications to minimise the impact on Guildfords' current clients.

This means the licence continues until 30 December 2024 for the purpose of Guildfords providing services that are reasonably necessary for or incidental to the day-to-day operation of the schemes, ASIC said.

Guildfords has the right to apply to the Administrative Appeals Tribunal to review ASIC's decisions.